The European Union and Its Enlargement Process

EU Enlargement Background

The European Union (EU) is an economic and political union of 27 member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community (ECSC) and the European Economic Community (EEC), formed by six countries in 1958. In 1967 they merged into European Community. The Maastricht Treaty established the EU under its current name in 1993. The EU has grown its size by the accession of new member states. For example, on May 1st, 2004, 10 new members joined the EU and EU-15 became EU-25. In 2007 it became EU-27 when Romania and Bulgaria joined.

It seems that the enlargement will continue and many people begin to consider whether the EU should admit more members. Countries should obey the accession rules if they want to join the EU. According to the ‘Copenhagen Criteria’, a member state must be a stable democracy, respect human rights, and have the rules of law and the protection of minorities. In terms of the economic aspect, it should have a functioning market economy. In addition, the country needs to adopt the common rules, standards, and policies that make up the body of EU law.

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Body Commission: regarded enlargement as the “Union’s most successful foreign policy instrument. New members can benefit more from enlargement than existing member states.

Strong economic growth:  Benefit from the EU budget and access? The 10 new members can expect to receive up to 4% per annum of their GDP from the EU’s structural and cohesion funds for projects aimed at improving their economic structures. Increase in GDP from 3. 7% to 5% on average in the first two years since accession.  In a long time, the acceding states could enjoy a rate of growth some 2% higher than that of the existing states.

Increase in Foreign Direct Investment 

For the new member states, FDI is a key factor in the process of economic modernization. New members can receive funds from foreign countries and use the money to boost the economy. Enlargementlarger market and openness to trade. Baldwin, Francois, and Portes (1997) argue that joining the EU will make the region substantially less risky from the point of view of domestic and foreign investors. 191 billion euros by 2004 However, they seem to over-rely on FDI. FDI accounts for a too-large part (e. g. Hungary: 70%). Once there is something wrong with some investors and do not invest them, for instance, the financial crisis, they will suffer tremendously. The benefit of existing members Enlargementmore people more consumers obtain more than 450 million consumers from Single European Market companies could expand their businesses and benefit from experience and location economies scale. Larger labor markets fill the labor shortage in existing states with a low-cost and highly-skilled workforce, for example, the UK and Ireland However, these skilled workers may replace the indigenous employees increase unemployment. High growth increases the purchasing power stimulates the import demand of acceding states and export of member states. Imports and exports between new and existing members have increased considerably EU15 share of total EU12 trade increased from 56% in 1993 to 62% in 2005.

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