EU Enlargement: Benefits of the Single Market Expansion for Current and New Member States

The study suggests that the EU's eastward enlargement will be beneficial to the new members, while most EU countries will record minor welfare gains. Poland is expected to gain 3.4% of GDP, and Hungary almost 7%. The new members will experience production increases across almost all sectors, while the impact on EU production in some sectors is foreseen to be negative, but very small. In Poland and Hungary, real wages will rise, with wages of unskilled workers increasing at a faster pace than wages of skilled workers. The welfare implications of accession are smaller than those found in other studies on this subject. Lejour, de Mooij and Nahuis (2001) found that the gains from the Single Market are equivalent to 9% of GDP in Hungary and 5.8% in Poland. Despite significant differences in methodology, the main reason for divergence of the results is that Lejour, de Mooij and Nahuis employ higher trade protection data, which does not incorporate provisions of the Europe Agreements and other trade policy changes. This study focuses on the impact of trade liberalisation and reduction of technical barriers to trade. A complete analysis of the impact of enlargement on existing and prospective members should clearly also include the implications of accession on the CAP and transfers from the EU budget such as Structural Funds.