EU Enlargement
Mar 31, 2015
EU Enlargement
Knocking on Heaven’s Door
Jozef KoningsLICOS, Centre for Transition
EconomicsKatholieke Universiteit Leuven
Economic Point of view about EU enlargement
Three adjustment mechanisms:
Migration
Growth in Trade
Foreign Direct Investments
Tsjechië Estland Hongarije Polen Slovenië
Population (in millions) 10,3 1,4 10,0 38,6 2,0
BBP per head (in euro) 13500 8500 11700 8700 16100
Agriculture % van de toegevoegde waarde
3,9 6,3 4,8 3,3 3,2
Landbouw: % of employment 5,1 7,4 6,5 18,8 9,9
Unemployment in 1999 8,8 13,7 6,4 16,1 7,0
Inflation 3,9 3,9 10,0 10,1 8,9
Begrotingstekort in % v/h BBP -4,2 -0,7 -3,1 -3,5 -2,3
Aandeel van de export naar de EU15 in % van de totale handel
68,6 76,5 75,1 69,9 63,8
Aandeel van de import van de EU15 in % van de totale handel
61,9 62,6 58,4 61,2 67,8
Basic indicators of the new and candidate members before 2000
Economic Point of View
high value added
routineactivities
EUcompany
CEECmarkets
EUmarkets
lowerlabour costs
ExportsMNO
Imports
Growthpotential
technologyskills
high income
Labour mobility
Migration
How important is migration actually?
After the German unification migration from East to West stayed under the 1% of the labour-population. For other countries it will even be lower.
The effects of Migrants on the wages and the existing employment is negligible.
Positive effects of Migration: extra consumption demand, which stimulates the growth Contribute to the social security, good for financing
pensions. Often high educated people, stimulates the innovation
Trade% in total Fl. export
Annual growth export
% in total B. import
Annual growth import
Export-import ratio
Hungary 0.64 38.72 0.52 10.34 1.25
Poland 1.03 24.20 0.54 -0.58 2.10
Slovenia 0.10 7.46 0.07 0.24 1.74
Czech Rep. 0.44 9.16 0.37 15.88 1.40
Total 2.20 1.50 1.59
Average Annual Growth Flandersi
1995-1998 (%)
Aandeel sector in totale Vlaamse uitvoer
in 1998 (%)
Aandeel sectoriële export
naar CEE
In total Flemish export
Agriculture 6.34 3.24 0.017
Winning delfstoffen
Minerals
11.04
160.03
1.12
0.03
0.008
0.003
Industry
Textile
Leather
Chemistry
Pharma
Electronic devices
Cables,engines,…
Transport
91.52
38.54
47.14
86.39
149.33
418.04
445.11
50.76
91.15
6.94
0.04
17.07
3.15
9.05
0.01
18.56
2.115
0.246
0.010
0.521
0.235
0.420
0.001
0.262
Services 158.19 4.41 0.146
Most important sectors in the Flemmish export to CEE
Average Annual Belgian Import
growthi
1995-1998 (%)
Aandeel sector in totaal Belgische invoer in
1998 (%)
Aandeel sectoriële import uit CEE landen
in totale Belgische import
Agriculture -55.93 2.54 0.010
Winning delfstoffen
Turf
-54.14
-28.59
4.81
0.16
0.012
0.013
Industriy
Textile
Confection
Reed, cork,…
Cokesovenproducten
Electronic devices
Accumulatoren
Lamps
Electric mainten.
Transport
Wood/ wooden furn.
29.72
-0.05
29.55
49.61
-85.70
201.12
6821.27
58.83
297.09
61.00
70.26
91.93
4.05
0.25
0.08
0.07
10.87
0.28
0.34
0.87
17.33
1.36
1.103
0.109
0.014
0.008
0.007
0.247
0.040
0.025
0.046
0.237
0.093
Services -21.36 0.53 0.005
Most important sectors in Belgian import from CEE
Trade
Export Import
DirectJob creation
IntermediateJob creation
Direct Job destruction
Intermediatejob destruction
Total Job creation
TotaleJob destruction
+ -
Net job creation
The relation between international Trade and Employment
1995 1996 1997 1998
Estonia
Hungary
Poland
Slovakia
Slovenia
Czech Rep.
-52
-410
209
-44
-92
237
-30
-618
984
139
-11
68
31
67
1678
-162
-349
-296
41
-18
1330
-147
-169
-539
Total -152 255 970 497
The net job creation in Flanders by trade with CEE
1995 1996 1997 1998
Total job creation
Total Flemish employment
Total job creation as percentage of the total Flemish Employment sector
6.014
2.081.612
0.29
7.282
2.053.126
0.35
10.238
2.080.912
0.49
12.293
2.117.934
0.58
The importance of job creation in the total Flemmish employment sector
Summary about Trade effects
Trade surplus with CEE
This is about very small percentages in the total Trade sector
Effects will be minimal
Net, positive employment effects
Delocalisation and Jobs?
Wage costs almost 7 X lower in CEE
BUT: Productivity is also
more than 7 X lower in CEE
Wage costs and Productivity
Belgium Portugal Poland Hungary Czech R.
Employment 239 113 475 223 396
Wage 40.7 10.1 5.0 5.9 5.13
Labor Productivity 72.9 18.6 10.0 12.6 9.3
Figure 1: Evolution Ratio of Wage Cost to Labor Productivity.5
5.6
.65
.7W
age/P
rodu
ctiv
ity
1995 1996 1997 1998 1999 2000Year
wage/productivity Belgium wage/productivity Portugal
wage/productivity Poland wage/productivity Hungary
How are our sectors doing?
Belg. Portugal Polan Hungary Czech R.
Chemistry 0.58 0.48 0.62 0.55 0.45
Leather Products
0.63 0.57 0.77 0.77 0.78
Paper Products
0.68 0.69 0.50 0.57 0.48
Textile 0.65 0.74 0.73 0.58 0.64
Publishing 0.71 0.56 0.56 0.68 0.62
Are we loosing our industry to Central – and Eastern Europe
Are we loosing our industry to East- and Central Europe?
em
plo
yme
nt P
ola
nd
manufacturing employment in Polandyear
1994 1996 1998 2000 2002
2600
2800
3000
3200
3400
em
plo
yme
nt C
zech
manufacturing employment in Czech Republicyear
1994 1996 1998 2000
1250
1300
1350
1400
1450
Conclusions The EU Enlargement is NO threath to the
Belgian economie because:
1/ we export more to CEE2/ the impact of Trade with CEE stays minimal3/ delocalisation almost doesn’t exist, its more
about investments for the maket
• The EU Enlargement probably stimulates the growth in Belgium
Conclusion