The Impact of EU Enlargement in 2004 and 2007 on FDI and Migration Flows Gravity Analysis of Factor Mobility

Andreas Breitenfellner, Jesus Crespo Cuaresma, Peter Mooslechner () and Doris Ritzberger-Grünwald ()
Additional contact information
Peter Mooslechner: Oesterreichische Nationalbank
Doris Ritzberger-Grünwald: Oesterreichische Nationalbank, http://www.oenb.at

Monetary Policy & the Economy, 2008, issue 2, 101–120

Abstract: This paper contributes to the ex post assessment of macroeconomic effects triggered by the 2004 and 2007 wave of EU enlargement, with a specific focus on factor trade, i.e. the crossborder mobility of labor and capital. While most of the potential for trade in goods and for foreign direct investment (FDI) was tapped ahead of actual enlargement, above all migration effects are spread out over a longer period, given transition arrangements for labor market integration. We use (innovative) gravity models to establish the potential for factor trade and crosscheck the results against recent developments. Our key finding is the uneven development of capital and labor mobility since EU enlargement. While migration potentials are materializing as expected, FDI stocks have remained relatively stable at already high levels. Furthermore, we observe a nonlinear relationship between migration and per capita income that may be explained on theoretical grounds and attributed to institutional factors. While the highest-income countries (above all Slovenia and the Czech Republic) are already turning into immigration countries, the low-income countries and those last to join the EU (Bulgaria and Romania) are likely to see further emigration and more FDI inflows.

Keywords: EU enlargement; factor trade; labor mobility; capital mobility; migration; foreign direct investment; gravity model (search for similar items in EconPapers)
JEL-codes: C33 F15 O11 (search for similar items in EconPapers)
Date: 2008
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://www.oenb.at/dam/jcr:7157bffd-c0a4-48e9-873 ... es_5_tcm16-88559.pdf (application/pdf)

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: https://EconPapers.repec.org/RePEc:onb:oenbmp:y:2008:i:2:b:5

Ordering information: This journal article can be ordered from
Oesterreichische Nationalbank, Documentation Management and Communications Services, Otto-Wagner Platz 3, A-1090 Vienna, Austria

Access Statistics for this article

Monetary Policy & the Economy is currently edited by Gerhard Fenz and Maria Teresa Valderrama

More articles in Monetary Policy & the Economy from Oesterreichische Nationalbank (Austrian Central Bank) P.O. Box 61, A-1011 Vienna, Austria. Contact information at EDIRC.
Bibliographic data for series maintained by Rita Glaser-Schwarz ().