Factor Mobility, Agriculture, Environment and Quantitative Studies
Edited by Miroslav N. Jovanović
Chapter 2: An Enlarged EU, Institutional Challenges and European Competitiveness
John H. Dunning and Jeremy Clegg 1 INTRODUCTION: OPPORTUNITIES AND CHALLENGES There are both exciting opportunities and daunting challenges facing an enlarged European Union (EU) in its bid to promote a higher rate of growth, and to enhance its global competitiveness.1 The aim of this chapter is to explore the effects of enlargement on the EU’s prospects for attaining its economic goals. This chapter is structured as follows. We shall concentrate on just three linked questions regarding the competitiveness of firms and the productivity of countries. First (Section 2), how far is the Union, and its member states, sufficiently motivated to raise competitiveness? Second (Section 3), has the EU got the appropriate governance and decision taking incentive structures? Third (Section 4), how might understanding the role of foreign direct investment (FDI) help us to answer the previous two questions? Section 5 concludes. The fact that, aside from Malta, Cyprus and Slovenia, the 2004–07 accession countries were formerly centrally planned means that, as transition economies, the link between institutional change and economic re-birth has been a very explicit one.2 For the existing 15 EU members pre-2004 – often referred to as the ‘old EU’ – the economic role of the new EU member states (the ‘new EU’) could be viewed in the role of acting as internal ‘power packs’ for the rest of the Union, in terms of market growth opportunities and, to a certain extent, lower-cost labour – though in manufacturing this role may have largely been ceded to China.3 In this...
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