A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Inotai, András; Stępniak, Andrzej Article — Published Version Strategic issues of EU enlargement Intereconomics Suggested Citation: Inotai, András; Stępniak, Andrzej (2002) : Strategic issues of EU enlargement, Intereconomics, ISSN 0020-5346, Springer, Heidelberg, Vol. 37, Iss. 4, pp. 180-188 This Version is available at: http://hdl.handle.net/10419/41168 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. 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Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. www.econstor.eu FORUM Strategic Issues of EU Enlargement The accession negotiations between the European Union and up to ten fi rst wave candidate countries are expected to come to a close at the end of 2002. While substantial progress has already been made, there remain major challenges to be met by both the enlarging Union and the prospective new members. Our authors, economists from two of the candidate countries, Hungary and Poland, present their views on a number of strategic issues. András Inotai* Special Challenges and Tasks of “Eastern” Enlargement he approaching “Eastern” enlargement of the Eu- time and again concerning the historical importance of Tropean Union is different in various respects from “Eastern” enlargement, there was no road-map for it in the pattern of previous enlargements. Western Euro- the nineties. No wonder that each candidate regarded pean experts attribute these differences to two basic this hesitation both as general uncertainty and as a factors. First, the large number of candidate countries unique window of opportunity. Thus, once a partial is emphasised, since up to ten countries have justifi ed road-map had been created (for the Swedish Presi- hopes of concluding negotiations by the end of 2002 dency and for part of the negotiations, but by far not and joining the EU by 2004. Second, the relatively low for the whole process of accession), there were already level of economic development is stressed, which, twelve countries negotiating on joining the EU. The measured in per capita GDP terms, lags behind the consequence is that, despite substantial differences average of the present EU and, in most cases, also among the candidates, at a rather advanced stage of behind the corresponding indicator of the least devel- negotiations the EU has practically no evaluation in- oped present member countries. struments or political leverage to reject the application Too Many... of any of the currently negotiating countries (excepting Bulgaria and Romania). The number of countries join- It is diffi cult to contradict the fi rst statement. One ing in 2004 seems to depend exclusively on the inter- can only add that the large number of candidates is nal political and socio-economic development of the the direct result of the lack of a clear enlargement candidates and on the outcome of referenda. While strategy by Brussels and the member countries over a self-disqualifi cation cannot be ruled out, EU-driven decade. This is in sharp contrast to all other strategic differentiation, which could have been possible with developments of the integration process which had a a clear road-map for the enlargement strategy in the clear timetable from the very beginning: the common 1990s, has run out of time, and any such initiative at commercial policy between 1969 and 1974, the imple- the present stage would be politically extremely risky mentation of the internal market from 1985 to 1992 or, and counterproductive. most recently, the economic and monetary union be- tween 1993 and 1999. There can hardly be any doubt ... and Too Poor? that some countries that form part of the Eurocurrency Certainly, the candidate countries generally have a zone today would have been unable to make the nec- lower level of economic development than the present essary (and still not always suffi cient) domestic adjust- members. However, the general view became victim ments without a detailed road-map which both forced of an incorrect, oversimplifi ed and therefore danger- and encouraged them to follow the prescribed path. ous homogenisation among the candidates. In case of Despite the solemn declarations which were made a large group consisting of highly different countries * Director, Institute for World Economics of the Hungarian Academy of – historically, politically, economically, socially and Sciences, Budapest, Hungary. otherwise – any “average” should be avoided. The 180 Intereconomics, July/August 2002 FORUM differences within this group are much greater (three additional economies-of-scale advantages) but that hundred per cent in GDP per capita terms) than the this factor may become the basic driving force of in- “development gap” between the more developed tegration particularly in those areas which used to be candidates and the EU average. Moreover, some can- characterised by reform deadlock in the last decade didates are nearer to the less developed EU member (common agricultural policy, institutional reforms, de- countries than the latter to the EU average (let alone cision-making process, move towards a more federal to the more developed member countries). Slovenia’s structure etc.) Others argue in a negative way, saying GDP per capita is similar to that of Greece or Portugal, that nobody knows whether the enlargement will re- and the gap between the Czech Republic’s or Hunga- sult in better global position of the EU, particularly not ry’s and that of Greece or Portugal is much less than in the fi rst years after enlargement (partly due to the the difference between the Czech or Hungarian GDP “heavy” fi nancial costs of such a step). Nevertheless, and those of the least developed candidate countries. delaying or postponing the enlargement by new “East- ern” countries would be much more costly, in security, It is, however, more important to emphasise that the economic and fi nancial terms. GDP per capita term, certainly a comprehensive one, must not be considered as the exclusive indicator of Third, in a changing world, in which the relative differentiation among countries. As a static fi gure it weight of the different production factors is also rap- misses the dynamic aspects of catching up which have idly changing, static indicators have to be dealt with always been expected to become more important ele- extremely carefully. Much more attention should be ments once a country joined the EU. Some of the less devoted to the question to what extent the candidate developed present member countries (mainly Ireland countries possess those elements (or production fac- but also Portugal and Spain) were able to substantially tors) which belong to the driving forces of develop- approach the development level of more advanced ment in a technology and information driven economic member countries following their accession. The main and social system. A cross-country comparison of factor in catching up was, however, not the difference such factors as the general level of education, avail- in growth rates but the sustained (and sustainable) ap- ability of human capital, innovative and creative en- preciation of their national currencies to the ECU (or vironment, institutional and social fl exibility, level of the DM). (Only part of the difference in infl ation rates social tolerance or cohesion, etc. would certainly offer was compensated by nominal devaluations against a rather differentiated picture (ranking), in which some the DM.) The same process can be observed today of the present candidate countries are at least as “de- in some of the candidate countries (most notably in veloped” as some (or most) of the present member the Czech Republic and Hungary, where the national countries. currency appreciated by 12 per cent against the Euro Fourth, considering the economic structure and in the last 12 months). Adding to this fact the obvious competitiveness of the less developed member and difference in growth rates, the catching up process the more developed candidate countries, the latter could be much more dynamic than expected by some seem to be much more adjusted to and integrated into of the experts and observers provided of course that the EU division of labour than the former at the mo- the appreciation of the currency does not undermine ment of their accession. Even in a contemporary com- the competitiveness of the economy. parison, some of the candidates reveal a higher share Second, the “Eastern” enlargement, in contrast of intra-EU trade than most of the member countries to previous enlargements, is not a narrow-minded (e.g. 75 per cent of Hungary’s exports are directed to European issue but part of the shaping of Europe’s the EU, while only two EU member countries have a position in the global context. Therefore, the strategic higher level of intra-EU export shares, Portugal and question is whether, and if yes, to what extent, the the Netherlands). Also, the structural development of coming enlargement will be able to improve Europe’s production and exports, mainly driven by privatisation political standing and economic strength in the world.