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

Abstract

This paper evaluates the implications of Eastern EU enlargement with the use of a computable general equilibrium model. The focus is on accession to the Single Market, with explicit modelling of the removal of border costs and costs of producing to different national standards. The results indicate significant welfare gains for the CEECs (volume of GDP increases by 1.4-2.4%) and modest gains for the EU. The steady state scenarios, which allow for the capital stock adjustment in response to higher return to capital, more than double the static welfare gains.