Publication

This paper simulates the consequences of a differential integration of Central and Eastern European countries into the EU using a spatial model of endogenous growth. It considers three aspects: the impact of inclusion in, or exclusion from, the EU on the location of advanced industries; the relocation of enterprises due to differential integration; and the welfare effects for insiders and outsiders from a dynamic viewpoint. The authors find that outsiders always lose in welfare terms relative to insiders but can outperform insiders when transition is explicitly introduced.