EUR 406 Economic Aspects of EU Eastern Enlargements A Jean Monnet course. Course Description. Course Objectives

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1 EUR 406 Economic Aspects of EU Eastern Enlargements A Jean Monnet course Didar Erdinç, Ph.D. Associate Professor of Economics Office: Room 310 in NAB (New Academic Building) Phone extension: 486 address: didar@aubg.bg Office hours: MW 4-5:30 p.m., or by appointment. Course Description The course provides a comprehensive economic analysis of the Central and Eastern European enlargement in the European Union, carefully evaluating the impact of such enlargement on both the the old members and the accession countries. After a brief overview of the main events that have led to the current stage of enlargement, we will look at the results of the implications of EU membership for the 12 new members states, as well as the challenges still facing the candidate states. The course will focus on those chapters of the acquis communautaire that have a predominantly economic and social impact, in particular sensitive policies such as trade, labor and capital migration, agriculture, and financial transfers. The potential impact of the euro on the financial systems of the accession countries will also be evaluated. Course Objectives The material taught in this course, the assignments, and the means of learning assessment have been conceived such that the course serves the broader goals derived from the mission of the university and the curriculum requirements of the European Studies program. The course will aim to achieve the following learning outcomes: (i) enable students to have a comprehensive understanding of the Central and Eastern European enlargement process in the European Union based on their prior literacy on the workings of the Union; (ii) allow students to evaluate the economic impact of enlargement on these economies based on the theoretical and practical information regarding the development of the European Union; (iii) enable students to interpret critically the facts and to judge them against the European Union s broader objectives, and enhance their ability to formulate policy recommendations to improve the process of integration; (iv) increase students awareness and critical understanding of current economic issues and challenges facing the Union in the context of the enlargement process; (v) allow students to develop analytical and problem solving skills that will enable them to form opinions on the future of European integration and the prospects for future enlargements; (vi) allow students to develop writing and communication skills through research papers and presentations. 1

2 The course will have a web site where lecture notes, and exam questions will be posted. Students are advised to follow issues related to enlargement in the press (e.g. The Economist or the Financial Times) and check the following web sites. A lot of documentation is available on the web, and students are expected to track materials on the EU for preparing for this course and the project. The key starting point is the official For current news on EU, visit EU Observer on EMU go to and for the British perspective. Students can also check the website of the French Finance Ministry where many excellent papers are placed in English and French; See also the web page on enlargement at EUR 324 is required. Prerequisites Class participation Students are expected to attend all lectures. Attendance will be taken occasionally. No excuse for missing a class is accepted. Assessment The lectures will complete but do not replace the readings, and students are encouraged to come to class after having read the assigned readings. There will be two exams, a midterm and a final exam, in addition to a paper based on group or individual work. Students are expected to start working on a research topic of their choice on the Enlargement process in the European Union. Students are also required to submit a three page outline at the end of the 4 th week of this semester. I will distribute a list of suggested topics, but you are welcome to come up with your own choice provided that the two pages (maximum) outline makes a convincing case why the topic is worthy of further research. The final paper (maximum length 15 pages) will be due on the day of the Final exam which will be announced by the Registrars. Students are welcome to get my feedback on their project draft. Date of the midterm exam is October 23 rd. Paper, due on final exam date % Midterm October 23 rd... 30% Final exam... 35% Class participation (attendance, discussions, short presentations)....10% The final exam is not cumulative. I reserve my right to adjust the participation score based on your class activity. Student advising I am willing to discuss with students at any reasonable time. Students are strongly encouraged to visit me in my office or just informally get in touch with me for consultation. Nevertheless, please be aware that my time is as valuable as yours. 2

3 Academic honesty Every student is expected to strictly follow the policy of the University. No exception from academic honesty standards will be tolerated, indifferent of nationality, gender, religion, academic status, etc. Students are not allowed to give or receive help during exams. Plagiarism is considered a serious offence. Readings No single textbook covers comprehensively the economic issues of European enlargement. Here are some sources that will be referred to in the course outline below. They are all placed in the reserve of the library under class EUR 406. Baldwin, R., and C.Wiplosz (2004) European Economic Integration, McGraw Hill (BW) Avery, G. and F. Cameron (1999) The Enlargement of the European Union Shefield Academic Press (AC) Ingham, H., and M. Ingham (2002) EU Expansion to the East, Edward Elgar Landesmann, M., and Dariusz Rosati (eds.) (2004) Shaping the New EuropePalgrave Lavigne, Marie (1995) The Economics of Transition, Chapters 1 and 6, St. Martin Press, New York Liebscher, K., et al. (eds.) (2004) The Economic Potential of A Larger Europe Edward Elgar Mayhew, A. (1998), Recreating Europe. The European Union's policy toward Central and Eastern Europe, Cambridge: University Press. (M) (not available yet in our library) Pelkmans, J (2001) European Integration. Methods and Economic Analysis (P) Various articles and other sources are mentioned in the Course Outline, where two stars (**) indicate a required reading, one star (*) indicates that only selected parts of that reading are recommended, and no star indicates optional (but interesting) readings or simply references to basic EU documents. Course outline (provisional) Here is a tentative plan of lectures. Changes may be necessary during the semester based on students preferences and abilities. Suggestions on the content of the course are welcome. Lecture notes, Question sets and other material will be available for all the topics on the web site of the course. 0. A brief history of European Economic Integration **See Lecture notes #0 and Question set #0. ** Baldwin, R., and C.Wiplosz (2004) European Economic Integration, McGraw Hill (BW), Chapters 1 and 2) 1. Socialist economy and its transition to a market system **Lavigne, Marie (1995) The Economics of Transition, Chapters 1 and 6, St. Martin Press, New York Tupy, Marian (2003) EU Enlargement: Costs, Benefits, and Strategies for Central and Eastern European Countrie, CATO Institute, Policy Analysis No. 489 ( ) European Commission, DG for Economic and Financial Affairs (2001) The economic impact of enlargement, Enlargement Papers, II/419/01-EN, Section 3, 3

4 2. An historical overview on the Eastern Enlargement of the European Union Official site for enlargement: **Ingham, H., and M. Ingham (2002) Towards a United Europe? In Ingham, H, and M. Ingham, (eds.) EU Expansion to the East, Edward Elgar. **Mayhew, Alan (2000) Enlargement of the European Union: An analysis of the negotiations with the Central and Eastern European candidate countries, Sussex European Institute, SEI Working Paper No European Commission (2003): More Unity and More Diversity Does Enlargement Matter for EU? Enlargement two years after: Europa: Gateway to European Union (1995) White Paper: Preparation of the Associated Countries of Central and Eastern Europe for Integration in the Internal Market of the Union Europa: Gateway to European Union: The Europe Agreements, 3. The process of enlargement and negotiations **PricewaterhouseCoopers (2002) Enlarging the European Union: are the economies of accession candidates ready? (see class website) Also read IPR false/default_bg.htm **AC, Chapters 2, 3, 4, 6 and 7 (letters such as AC indicate the source according to the Readings section above, and numbers represent chapters) Mayhew, Alan (2000) Enlargement of the European Union: An analysis of the negotiations with the Central and Eastern European candidate countries, Sussex European Institute, SEI Working Paper No. 39. (see class website) Student Presentations and Class Discussion: Mayhew s Article (implications for Turkey, Croatia and others) (Date: October 2 nd ) 4. Economic growth *European Economic Advisory Group (2004), The 2004 Enlargement: Key economic issues, EEAG Report df European Commission, DG for Economic and Financial Affairs (2001) The economic impact of enlargement, Enlargement Papers, II/419/01-EN, Section 3, Martin, Carmela and Turrion, Jaime (2001), Trade Impact of the Integration of the Central and Eastern European Countries on the European Union, Working Paper No: 11/2001 (See class web site). 4

5 5. Free movement of goods *Baldwin, R., and Francois Portes (1997) EU Enlargement: Small costs for the West, big gains for the East. Section 2.2 and 2.3. (See class web site). Pelkmans, J. (2002) Economic implications of enlargement, Francois, Joseph, and Machiel Rombout (2001) Trade effects from the integration of the Central and East European Countries into the European Union, SEI WP No. 41. (See class web site). Europa: Gateway to European Union, Chapter 1: Free movement of goods (See class web site). Europa: Gateway to European Union, Free movement of goods; Bulgaria, Romania, and Turkey, or Johnson, M., and J. Rollo (2001) EU Enlargement and Commercial Policy: Enlargement and the Making of Commercial Policy, Sussex European Institute, SEI Working Paper No. 43. (See class web site). European Commission, Directorate-General Enlargement (2004), Enlargement of the European Union; Guide to the Negotiations Chapter by Chapter. (See class web site). EurActiv: Free movement of goods; negotiation positions. (See class web site). 6. Free movement labor Bolesta, Andrzej (2004) New immigration policy in Europe, TIGER Working Paper Series, No. 70, *Byrska, Monika (2004) The unfinished enlargement, ECAS, *European Economic Advisory Group (2004), The 2004 Enlargement: Key economic issues, EEAG Report df *Pelkmans, J. (2002) Economic implications of enlargement, *European Commission, Employment web page, *European Commission (2003) Employment in Europe 200; Recent Trends and Prospects *European Commission, Employment and Social Affaires (2003) The impact of Eastern enlargement on Employment and labour markets in the EU Member States, Parts 1 and 2, accessible from the Commission s Employment web page: European Commission, DG for Economic and Financial Affairs (2001) The economic impact of enlargement, Enlargement Papers, II/419/01-EN, Section 3, European Commission (2002) Free Movement of Persons A Practical Guide for an Enlarged European Union (See class web site). European Commission, Economic Policy Committee (2003) Key structural challenges in the acceding countries: The integration of the acceding countries into the Community s economic policy co-ordination processes 5

6 Tupy, Marian (2003) EU Enlargement: Costs, Benefits, and Strategies for Central and Eastern European Countrie, CATO Institute, Policy Analysis No. 489 ( ) Midterm: October 23 rd 7. Free Movement of Capital: Foreign Direct Investment in the CEECs *Pelkmans, J. (2002) Economic implications of enlargement, Kai Carstensen and Farid Toubal (2003) Foreign Direct Investment in Central and Eastern European Countries:A Dynamic Panel Analysis, 8. Agriculture European Commission, DG for Agriculture (2003) Medium term prospects for agricultural markets and income in the European Union , Chapter 3 *European Commission, DG for Economic and Financial Affairs (2001) The economic impact of enlargement, Enlargement Papers, II/419/01-EN, Section 5, **European Commission, DG for Economic and Financial Affairs (2001) Enlargement Argumentaire, Questions 30-34, Rollo, Jim (2003) Agriculture, the structural funds, and the budget after enlargement, SEI Wqorking Paper No. 68, (See class website) Sofia conference Ardy, B. (1999) Agricultural, Structural Policy, the Budget, and Eastern Enlargement of the European Union, in K. Henderson, ed., Back to Europe, UCL Press, pp Mayhew, A. (2002) The Negotiating Position of the European Union on Agriculture, the Structural Funds and the EU Budget, SEI Working Paper No 52 (See class website) Student Presentations and Class Discussion: The State of Play for Bulgaria, Romania, Croatia, and Turkey (Date: November 13 th ), Turkey s accession to the EU. Read for the class discussion: Barysch, Katinka (2005), Economics of Turkish Accession, Centre for European Reform Essays, United Kingdom (Available under the class web site). 9. Enterprise adaptation to enlargement European Commission; Enterprise Directorate General, The European Charter for Small Enterprises (See class website) Witold Orlowsky and Alan Mayhew (2001) The impact of EU accession on enterprise adaptation and institutional development in the countries of central and Eastern Europe, SEI Working Paper No. 44. (See class website) 10. Economic and Monetary Union I -- Background European Commission (1999) Seminar on Currency Boards in the context of EU accession, Enlargement Papers, No. 1, 6

7 European Parliament (1999), EMU and enlargement: A review of policy issues, Economic Affaires Series, ECON 117 EN df Economic and Monetary Union II -- Currency Boards and the EMU European Commission (1999) Seminar on Currency Boards in the context of EU accession, Enlargement Papers, No. 1, Economic and Monetary Union III -- Enlargement and implications for the EMU European Commission (1999) Seminar on Currency Boards in the context of EU accession, Enlargement Papers, No. 1, Economic and Monetary Union IV Are the CEECs prepared to join EMU? **Rostowski, Jacek (2003), When should the Central Europeans Join the EMU? Studies and Analyses, Warsaw (See the class web site). Gros, Daniel, and Alexandr Hobza (2003) Exchange rate variability as an OCA criterion: Are the candidates ripe for the euro? ICEG Working Papers Series, No. 23, Blaszkiewicz, Monika, and Przemyslaw Wozniak (2003) Do candidate countries fit the optimumcurrency-area criteria? CASE Working Paper No. 267, DeGrawe, P., and V. Lavrač (1999) Challenges of European Monetary Union for Central European Countries, in DeGrawe, P., and V. Lavrač (eds., Inclusion of Central European Countries in the European Monetary Union, Kluwer Academic Publishers Backé, P. (1999) Integrating Central and Eastern Europe into the European Union: The Monetary Dimension, in DeGrawe, P., and V. Lavrač (eds., Inclusion of Central European Countries in the European Monetary Union, Kluwer Academic Publishers 7