The EU enlargement and economic growth in the CEE new member countries

This paper analyses whether EU enlargement contributed to economic growth and real convergence in the ten new member countries from Central and Eastern.

In this paper, we aim to check whether the EU enlargement contributed to economic growth of ten new member countries from Central and Eastern Europe (CEE-10), including their real convergence towards the EU-15 development level. To this end, we econometrically test the relationships between selected macroeconomic variables linked to the EU enlargement and the rate of economic growth of the CEE-10 countries over the period 1996-2007. The variables comprise: (i) the progress of market or structural reforms, (ii) economic freedom, (iii) foreign aid, and (iv) the FDI inflow.

In the first part of the study, we test the convergence hypothesis (both beta and sigma) for the CEE-10 group towards the EU-15 countries. In the subsequent parts, we build an econometric model and carry out the correlation and regression analyses, with a view to find out the possible effect of the EU membership on economic growth of the CEE countries. The last part of the paper develops possible scenarios of the real convergence of the CEE countries towards the EU-15.

Our results indicate that the EU enlargement significantly contributed to economic growth of the CEE-10 countries and their catching up with the EU-15 development level. This conclusion has been supported by both the convergence analysis and the econometric test of economic growth determinants. According to our projections, the actual process of real convergence between individual CEE-10 economies and the EU-15 may take between 8 and 33 years.