Another Round of EU Enlargement: What are the economic and institutional must-haves for candidate countries to make accelerated enlargement possible?

Richard Grieveson, Ioannis Gutzianas, Branimir Jovanovic, Michael Landesmann and Olga Pindyuk

No 102, wiiw Policy Notes from The Vienna Institute for International Economic Studies, wiiw

Abstract: This study identifies the minimum economic and institutional conditions that candidate countries must meet to ensure macroeconomic stability, sustainable growth, and effective integration into the EU, under a politically accelerated enlargement process. In the area of external accounts, successful past accessions managed current account deficits through FDI into tradable sectors, while real effective exchange rate misalignments and FDI into non-tradables led to post-accession instability. Key reforms include building export capacity, targeting FDI to tradables, aligning wages with productivity, and reducing debt-financed imbalances. On fiscal policy, while fiscal discipline is essential, overly conservative approaches can hinder growth. Countries with high debt-to-GDP ratios at accession faced prolonged austerity. Reforms should focus on fiscal sustainability, growth-oriented spending, tax base expansion, and procurement transparency. Labour market challenges include depopulation, low productivity, and high poverty. Effective employment policies, migration strategies, regional equity, and education-labour market alignment are essential. Institutional quality remains a critical barrier. Weak rule of law, corruption, and governance backsliding threaten accession prospects and must be addressed before accession. The study concludes that a focused set of pre-accession ‘must haves’ can guide enlargement, supported by adapted EU tools to mitigate risks and foster convergence.

Keywords: EU Enlargement; EU Accession; Candidate Countries; Ukraine; Western Balkans (search for similar items in EconPapers)
JEL-codes: F02 F15 F55 O52 P52 (search for similar items in EconPapers)
Pages: 104 pages including 2 Tables and 63 Figures
Date: 2025-11
New Economics Papers: this item is included in nep-inv
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