Eastern Europe: the EU's frontier - incorporation or regime competition?

This paper looks at some aspects of trade and investment relations between the EU and the countries of central and eastern Europe (CEEC). The approach used is based on a model of trade with, and development of, a frontier by a metropolitan economy developed by Ronald Findlay. Findlay's model po...

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Bibliographic Details
Published in:Journal of economic studies (Bradford) 1999, Vol.26 (4/5), p.383-403
Main Authors: McDowell, Moore, Thom, Rodney
Format: Article
Language:English
Subjects:
Capital stock
Central and Eastern Europe
Consumption
Eastern Europe
Economic integration
Economics
European Union
Findlay, Ronald
Industry
Investments
Labor market
Labour
Labour market
Liberalization
Political regimes
Raw materials
Trade
Trade relations
Trading companies
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Summary:This paper looks at some aspects of trade and investment relations between the EU and the countries of central and eastern Europe (CEEC). The approach used is based on a model of trade with, and development of, a frontier by a metropolitan economy developed by Ronald Findlay. Findlay's model posits the existence of a monopolised supply of an input to the metropolitan economy. Development of the frontier enables the metropolitan economy to break the monopoly. The expansion of outward processing trade between the EU and the CEEC, a form of intra-industry trade, is a notable feature of economic relations in Europe since the fall of the Soviet empire. This is modelled in the paper as a device whereby a supply side constraint (labour market restrictions) within the EU is relaxed by vertical disintegration of production and relocation outside the EU. This in turn has implications for the incorporation of the CEEC in the EU. While they remain outside the EU they provide regime competition, particularly in the area of labour market policy. The income distribution implications of this competition provides a political basis for moves to extend membership of the EU on the basis of the CEEC's adopting the acquis communautaire.
ISSN:0144-3585
1758-7387
DOI:10.1108/01443589910284930