Consequences of European Union Enlargement for Spain

20 Pages Posted: 30 Jun 2004

See all articles by Jaime Turrion

Jaime Turrion

Universidad Complutense de Madrid (UCM) - Faculty of Economics and Business Administration

Francisco J. Velázquez

Universidad Complutense de Madrid - GRIPICO

Abstract

This article analysis the effects that EU Eastern enlargement will have on the Spanish economy. As opposed to the widespread belief that the major impact on Spain will stem from the reduction of Community funds received, the impact on two real variables is also analyzed here, namely trade and foreign direct investment, and evidence is offered of the restructuring of economic activity in the enlarged Europe and its effects on the Spanish economy. In addition, the competition for Spain of the new partners in the Community market is also examined. One of the most noteworthy results is that the competition of the new members of the European market is becoming stronger, as they have a commercial structure that is becoming more and more similar to Spain's and with a greater technological content. This phenomenon appears to be the outcome of the activity of the multinationals, which are re-organizing their activity and transferring part of their production to Central Europe to capitalize on the cost advantages of the new members and their more strategic geographical situation. Furthermore, evidence is put forward that, if the criteria for eligibility for the Structural and Cohesion Funds are not altered, Spain will be one of the countries in which the budgetary situation will deteriorate most in the post-enlargement EU.

Suggested Citation

Turrion, Jaime and Velázquez, Francisco J., Consequences of European Union Enlargement for Spain. The World Economy, Vol. 27, No. 6, pp. 761-780, June 2004. Available at SSRN: https://ssrn.com/abstract=558907

Jaime Turrion (Contact Author)

Universidad Complutense de Madrid (UCM) - Faculty of Economics and Business Administration ( email )

School of Business Administration
Somosaguas Campus
Madrid, Madrid 28223
Spain

HOME PAGE: http://www.ucm.es/info/ecap2

Francisco J. Velázquez

Universidad Complutense de Madrid - GRIPICO ( email )

Pabellon de Segundo
Somosaguas Campus
Madrid, Madrid E-28223
Spain
+34 91 394 24 58 (Phone)
+34 91 394 24 58 (Fax)

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