EU eastern enlargement and foreign investment: Implications from a neoclassical growth model

Kateryna Garmel, Lilia Maliar and Serguei Maliar

Journal of Comparative Economics, 2008, vol. 36, issue 2, pages 307-325

Abstract: In this paper, we study how eastward enlargement of the EU may affect the economies of old and new EU members and non-accession countries in the context of a multi-country neoclassical growth model where foreign investment is subject to border costs. We assume that at the moment of the EU enlargement border costs between the old and new EU member states are eliminated but remain unchanged between the old EU member states and the non-accession countries. In a calibrated version of the model, the short-run effects of the EU enlargement proved to be relatively small for all the economies considered. The long-run effects are however significant: in the accession countries, investors from the old EU member states become permanent owners of about 3/4 of capital, while in the non-accession countries, they are forced out of business by local producers. Journal of Comparative Economics 36 (2) (2008) 307-325.

Date: 2008
View citations in EconPapers

Downloads: (external link)
http://www.sciencedirect.com/science/article/B6WHV ... c8c90c46f10dcc101d1d
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:eee:jcecon:v:36:y:2008:i:2:p:307-325

Access Statistics for this article

Journal of Comparative Economics is edited by D. Berkowitz and G. Roland

More articles in Journal of Comparative Economics from Elsevier
Series data maintained by Heidi Boesdal ().