Economic impact of the EU Eastern enlargement on New Member States revisited: The role of economic institutions

Hagemejer, Jan; Michałek, Jan J.; Svatko, Pavel

doi:10.2478/ceej-2021-0008

Abstract

The paper analyses the economic implications of the accession of New Member States (NMS) to the European Union (EU) in 2004 and 2007. The estimation effects of integration with the EU were carried out as a comparative case study using the synthetic control method (SCM) proposed by Abadie and Gardeazabal. Compared to previous studies analysing the effects of accession to the EU (Campos, Coricelli and Moretti), we check for the importance of the quality of economic institutions for the matching process of the analysed economies with their comparators. The results of the econometric analysis show a positive impact on the country performance 6 years and 12 years after accession to the EU. The gains from accession are large but not universal. For 5 of the 10 analysed countries the difference in levels of per capita gross domestic product (GDP) against the counterfactual is at least 30%.

References

Abadie, A., & Gardeazabal, J. (2003). The Economic Costs of Conflict: A Case Study of the Basque Country. American Economic Review, 93(1), 113–131.
Search in Google Scholar Back to article
Abadie, A., Diamond, A., & Hainmueller, J. (2010). Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California's Tobacco Control Program. Journal of the American Statistical Association, 105(490), 493–505.
Search in Google Scholar Back to article
Abadie, A., Diamond, A., & Hainmueller, J. (2011). Synth: An R Package for Synthetic Control Methods in Comparative Case Studies. Journal of Statistical Software, 42(13), 1–17.
Search in Google Scholar Back to article
Abadie, A., Diamond, A., & Hainmueller, J. (2015). Comparative Politics and the Synthetic Control Method. American Journal of Political Science, 59(2), 495–510.
Search in Google Scholar Back to article
Acemoglu, D., Johnson, S., & Robinson, J. A. (2005). Institutions as a fundamental cause of long-run growth. In P. Aghion & S. N. Durlauf (Eds.), Handbook of Economic Growth (Vol. IA). Elsevier B.V.
Search in Google Scholar Back to article
Athey, S., & Imbens, G. W. (2017). The State of Applied Econometrics: Causality and Policy Evaluation, Journal of Economic Perspectives, 31(2), 3–32.
Search in Google Scholar Back to article
Aytuğ, H., Kütük M. M., Oduncu, A., & Togan, S. (2017). Twenty Years of the EU-Turkey Customs Union: A Synthetic Control Method Analysis, Journal of Common Market Studies, 55(3), 419–431.
Search in Google Scholar Back to article
Badinger, H., (2005). Growth Effects of Economic Integration: Evidence from the EU Member States. Review of World Economy, 141, 50–78.
Search in Google Scholar Back to article
Baier, S. L., Bergstrand, J. H., Egger, P., & McLaughlin, P. A. (2008). Do Economic Integration Agreements Actually Work? Issues in Understanding the Causes and Consequences of the Growth of Regionalism. The World Economy, 31, 461–497.
Search in Google Scholar Back to article
Baldwin, R. E., & Venables, A. J. (1995). Regional economic integration. In G. Grossman & K. Rogoff (Eds.), Handbook of International Economics: vol. 3 (pp. 1597–1644). Amsterdam, Netherlands: Elsevier Science.
Search in Google Scholar Back to article
Baldwin, R. E., & Wyplosz, C. (2009). The Economics of European Integration. London, England: McGraw-Hill Higher Education.
Search in Google Scholar Back to article
Baldwin, R. E., Francois, J. F., Portes, R., Rodrik, D., & Székely, I. P. (1997). The Costs and Benefits of Eastern Enlargement: The Impact on the EU and Central Europe. Economic Policy, 12(24), 125–176.
Search in Google Scholar Back to article
Bayoumi, T., & Eichengreen, B. (1995). Is Regionalism Simply a Diversion? Evidence from the Evolution of the EC and EFTA. NBER Working Paper No. 5283.
Search in Google Scholar Back to article
Böwer, U., & Turrini, A. (2010). EU Accession: A Road to Fast-track Convergence? Comparative Economic Studies, 52(2).
Search in Google Scholar Back to article
Breuss F. (2002). Benefits and Dangers of EU Enlargement. Empirica, 29, 245–274.
Search in Google Scholar Back to article
Breuss, F. (2001) Macroeconomic Effects of EU Enlargement for Old and New Members. WIFO Working Papers 143. Retrieved from https://www.econstor.eu/
Search in Google Scholar Back to article
Bruno, M., & Sachs, J. D. (1985) The Economics of Worldwide Stagflation. Cambridge, MA: Harvard University Press.
Search in Google Scholar Back to article
Campos, N. F., & Coricelli, A. (2002). Growth in Transition: What We Know, What We Don’t, and What We Should. Journal of Economic Literature, 40(3), 793–836.
Search in Google Scholar Back to article
Campos, N. F., Coricelli, F., & Moretti, L. (2014). Economic Growth and Political Integration: Estimating the Benefits from Membership in the European Union Using the Synthetic Counterfactuals Method. IZA Discussion Paper 8162.
Search in Google Scholar Back to article
Campos, N. F., Coricelli, F., & Moretti, L. (2019). Institutional Integration and Economic Growth in Europe. Journal of Monetary Economics, 103, 88–104.
Search in Google Scholar Back to article
Crafts, N. F. R. (2016). West European economic integration since 1950: implications for trade and income. In H. Badinger & V. Nitsch (Eds.), Routledge Handbook of the Economics of European Integration (Routledge International Handbooks), (1st ed.).
Search in Google Scholar Back to article
Crespo-Cuaresma, J., Ritzberger-Grünwald, D., & Silgoner, M. A. (2008). Growth, convergence and EU membership. Applied Economics, 40(5), 643–656,
Search in Google Scholar Back to article
De Melo, M., Denizer, C., & Gelb, A. (1996). Patterns of Transition from Plan to Market. World Bank Economic Review, 10(3), 397–424.
Search in Google Scholar Back to article
Directorate General for Economic and Financial Affairs (2001). The Economic Impact of Enlargement. Number 4 June 2001, II/419/01-EN. Retrieved from https://www.unece.org/
Search in Google Scholar Back to article
Eichengreen, B. (2007). The European Economy Since 1945: Coordinated Capitalism and Beyond. Princeton, NJ: Princeton University Press.
Search in Google Scholar Back to article
Eichengreen, B., & Boltho, A. (2008). The Economic Impact of European Integration. Centre for Economic Policy Research Discussion Paper Series No. 6820.
Search in Google Scholar Back to article
Europe Agreement establishing an association between the European Communities and their Member States, of the one part, and the Republic of Poland, of the other part. Official Journal L 348, 31/12/1993 P. 0002 – 0180; Retrieved from https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:21993A1231(18):EN:HTML
Search in Google Scholar Back to article
Firpo, S., & Possebom, V. (2018). Synthetic Control Method: Inference, Sensitivity Analysis and Confidence Sets. Journal of Causal Inference, 6(2), 1–25.
Search in Google Scholar Back to article
Fogel, R. (1964). Railroads and American Economic Growth. Baltimore, MD: Johns Hopkins University Press.
Search in Google Scholar Back to article
Frankel, J. A., & Romer, D. (1999). Does Trade Cause Growth? American Economic Review, 89(3), 379–399.
Search in Google Scholar Back to article
Hagemejer, J., & Mućk, J. (2019). Export-led growth and its determinants: Evidence from Central and Eastern European countries. World Economy, 42, 1994–2025.
Search in Google Scholar Back to article
Halkos, G. E., & Tzeremes, N. G. (2009). Economic efficiency and growth in the EU enlargement. Journal of Policy Modeling, 31, 847–862.
Search in Google Scholar Back to article
Harrison, G., Rutherford, T., & Tarr, D. (1994). Product standards, Imperfect Competition, and Completion of the Market in the European Union. World Bank Policy Research Working Paper No. 1293.
Search in Google Scholar Back to article
Haughton, T. (2007). When Does the EU Make a Difference? Conditionality and the Accession Process in Central and Eastern Europe. Political Studies Review, 5, 233–246.
Search in Google Scholar Back to article
Hoff K., & Stiglitz, J. E. (2004a). After the Big Bang? Obstacles to the Emergence of the Rule of Law in Post-Communist Societies. American Economic Review, 94(3), 753–631.
Search in Google Scholar Back to article
Hoff, K., & Stiglitz J. E. (2004b). Exiting a Lawless State. The Economic Journal, 118(531), 1474–1497.
Search in Google Scholar Back to article
Lejour, A. M., de Mooij, R, A., & Nahuis, R. (2001). EU Enlargement: Economic Implications for Countries and Industries. CESifo Working Paper No. 585.
Search in Google Scholar Back to article
Roaf, J., Atoyan, R., Bikas, J., & Krogulski, K. (2014). 25 Years of Transition: Post-Communist Europe and the IMF. Washington D.C.: IMF.
Search in Google Scholar Back to article
Roland, G., & Verdier, T. (2003). Law Enforcement and Transition. European Economic Review, 47(4), 669–685.
Search in Google Scholar Back to article

Economic impact of the EU Eastern enlargement on New Member States revisited: The role of economic institutions

Abstract

Paradigm

My account