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EU Enlargement Knocking on Heaven’s Door Jozef Konings LICOS, Centre for Transition Economics Katholieke Universiteit Leuven.

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Presentation on theme: "EU Enlargement Knocking on Heaven’s Door Jozef Konings LICOS, Centre for Transition Economics Katholieke Universiteit Leuven."— Presentation transcript:

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2 EU Enlargement

3 Knocking on Heaven’s Door Jozef Konings LICOS, Centre for Transition Economics Katholieke Universiteit Leuven

4 Economic Point of view about EU enlargement Three adjustment mechanisms:  Migration  Growth in Trade  Foreign Direct Investments

5 TsjechiëEstlandHongarijePolenSlovenië Population (in millions)10,31,410,038,62,0 BBP per head (in euro) Agriculture % van de toegevoegde waarde 3,96,34,83,33,2 Landbouw: % of employment5,17,46,518,89,9 Unemployment in 19998,813,76,416,17,0 Inflation3,9 10,010,18,9 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 68,676,575,169,963,8 Aandeel van de import van de EU15 in % van de totale handel 61,962,658,461,267,8 Basic indicators of the new and candidate members before 2000

6 Economic Point of View

7 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

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9 Trade % in total Fl. export Annual growth export % in total B. import Annual growth import Export- import ratio Hungary Poland Slovenia Czech Rep Total

10 Average Annual Growth Flandersi (%) Aandeel sector in totale Vlaamse uitvoer in 1998 (%) Aandeel sectoriële export naar CEE In total Flemish export Agriculture Winning delfstoffen Minerals Industry Textile Leather Chemistry Pharma Electronic devices Cables,engines,… Transport Services Most important sectors in the Flemmish export to CEE

11 Average Annual Belgian Import growthi (%) Aandeel sector in totaal Belgische invoer in 1998 (%) Aandeel sectoriële import uit CEE landen in totale Belgische import Agriculture Winning delfstoffen Turf Industriy Textile Confection Reed, cork,… Cokesovenproducten Electronic devices Accumulatoren Lamps Electric mainten. Transport Wood/ wooden furn Services Most important sectors in Belgian import from CEE

12 Trade ExportImport Direct Job creation Intermediate Job creation Direct Job destruction Intermediate job destruction Total Job creation Totale Job destruction + - Net job creation The relation between international Trade and Employment

13 Estonia Hungary Poland Slovakia Slovenia Czech Rep Total The net job creation in Flanders by trade with CEE

14 Total job creation Total Flemish employment Total job creation as percentage of the total Flemish Employment sector The importance of job creation in the total Flemmish employment sector

15 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

16 Delocalisation and Jobs? Wage costs almost 7 X lower in CEE BUT: Productivity is also more than 7 X lower in CEE

17 Wage costs and Productivity BelgiumPortugalPolandHungaryCzech R. Employment Wage Labor Productivity

18 Figure 1: Evolution Ratio of Wage Cost to Labor Productivity

19 How are our sectors doing? Belg.PortugalPolanHungaryCzech R. Chemistry Leather Products Paper Products Textile Publishing

20 Are we loosing our industry to Central – and Eastern Europe

21 Are we loosing our industry to East- and Central Europe?

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23 Conclusions The EU Enlargement is NO threath to the Belgian economie because: 1/ we export more to CEE 2/ the impact of Trade with CEE stays minimal 3/ delocalisation almost doesn’t exist, its more about investments for the maket The EU Enlargement probably stimulates the growth in Belgium

24 Conclusion


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