An evaluation of the EU’s Fifth Enlargement With special focus on Bulgaria and Romania

This paper analyses the impact of the EU accession of Bulgaria and Romania.

The fifth EU enlargement in 2004 and 2007 did not only extend the Single European Market. Since 2009, the euro zone encompasses 16 out of 27 EU member states.

Additionally the Schengen area has been expanded to include 25 European countries (22 EU member states). A first evaluation shows that the new member countries have already been able to benefit noticeably from their participation in the single market, despite not yet fully integrated labour markets. However, the international financial crisis also shadows onto the economies of the new member states. After an ex post evaluation the possible future integration effects of EU’s 2007 enlargement by Bulgaria and Romania are simulated with a simple macro-economic integration model able to encompass as many of the theoretically predicted integration effects possible. The direct integration effects of Bulgaria and Romania spill-over to EU15, including Austria and the 10 new member states of the 2004 EU enlargement. The pattern of the integration effects is qualitatively similar to those of EU’s 2004 enlargement by 10 new member states. Bulgaria and Romania gain much more from EU accession than the incumbents in the proportion of 20:1. In the medium-run up to 2020, Bulgaria and Romania can expect a sizable overall integration gain, amounting to an additional ½ percentage point real GDP growth per annum. Within the incumbent EU member states Austria will gain somewhat more (+0.05%) than the average of EU15 (+0.02%) and the 10 new EU member states (+0.01%), which joined the EU in 2004.