Health not wealth: Enlarging the EMU

Abstract:

Economic health not wealth should be the decisive criterion when considering the prospects of the Central and East European (CEE) candidates for EU membership and the capacity of the EU to enlarge. Viewed this way the outlook is promising. The CEE countries are still very poor, compared to most of the existing EU members, but they are also much more dynamic. Growth rates are generally expected to remain around 4-5 per cent in CEE for the foreseeable future, compared to about 2-3 per cent for the EU. This still implies that full catch-up in terms of GDP per capita will take decades, rather than years, but full catch-up is not the relevant criterion if one is concerned about enlargement. Experience in the EU has shown that problems are much more likely to arise from established rich member countries with stagnant economies (Belgium in the 1980s and Germany today) than poor, but more dynamic states (such as Portugal and Ireland today). The fact that most of the so-called 'periphery' is now growing more strongly than the 'core' confirms that EU integration benefits poorer countries even more.