There are various channels through which the EU accession process affects the
economy of an applicant or a member country. The direct ones stem from EU preaccession programs, EU funds for less developed members, establishment of Free
trade zone, Customs union, Single market and Monetary union, implementation of
acquis communautaire and free movement of labour, capital, goods and services.
Furthermore, the changing attitudes of investors and other foreign institutions due to
the stimuli for applicant countries to comply with certain rules for internal policies
play an active role in economic development as well.
The main economic benefit from the EU accession process is the improved efficiency
of allocation of resources due to free movement of factors of production like capital,
technology and labour within an economy of a larger scale. When companies become part of the Single Market, they will have to cope with strong competitive pressure from foreign firms. In their effort to attract larger market shares they will be forced to minimize their costs, use economies of scale and increase productivity. The whole process is likely to cause certain sectoral employment shifts that may further enhance economic growth. Additional gains from trade liberalization include improved international competitive position, growth of consumer welfare due to lower import prices and attraction of investments from export-oriented companies.
The process of integration with EU countries involves financial transfers to the
applicant countries in the area of agriculture, ecology, institutional reform and
infrastructure. EU accession also serves as a guarantee for conducting transparent and predictable internal economic policies, ultimately resulting in higher level of
physical investment. At the same time EU membership is a precondition for joining
the EMU. In economic terms this means higher macroeconomic stability, lower
transaction costs in the economy and easier planning of business activities.
The costs of EU membership should be tackled very carefully because of their
controversial nature. They are associated mainly with the drop in production and
employment as a result of intensified foreign competition, costs of modeling the
institutions in accordance to EU requirements, the additional investment necessary to
comply with EU standards in areas like, for example, ecology. The negative effects
grow considerably if one adopts the view that EU stands for “outdated and ill-guided
models of economic policies” because of its relatively heavy regulations for the
business, protectionist against outside-world nature, oversized welfare states and rigid labour markets.