Economic Impact of 2004 enlargement on EU15

Clémence GILBERTAS (Student number: 2930435)

Examine the economic impact of the 2004 enlargement on the EU 15 member states. Consider why further enlargement is relatively unpopular.

Teacher: Brian Ardy Date : 19th November 2010

Economic Impact of 2004 enlargement on EU15

I)

INTRODUCTION

The 2004 enlargement is the fifth one since 1973. This enlargement was the largest one in terms of people, land and number of countries. 25 countries have joined this zone of peace, prosperity, and stability called the European Union. The security of all the citizens will be improved.

But in which context ?
Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia which are Central plus Malta and Cyprus became European Union members the 1st May 2004. This enlargement is first of all an answer to a political threat. Indeed, theses countries of Central and Eastern Europe were communist countries. They were under dictatorship and they have become democratic countries, so their goal was to reinforce their new positions. Therefore, they have integrated the European Union to break away the Russian communist influence. The EU was vital for these countries to make their economic success safe. The transition from 15 to 25 member states has had favourable consequences for both new and old member states. Nevertheless, important changes always cause trouble. And this fifth enlargement is not an exception.

II)

THE ECONOMIC IMPACT ON THE OLD MEMBER STATES
 POSITIV EFFECTS

First of all, the entry of 10 countries within the European Union has expanded the market from 378 million to 490 million consumers (+28%). This represents a great opportunity for the old member states, to sell probably more. Secondly, there was a strong growth of Foreign Direct Investment (FDI) in the New Member State (NMS). In 2004 in the NMS, the resources of FDI were about 200 billion Euros. With a sharing about 80% of