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Prospects for Ireland in an Enlarged EU

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  • Frank Barry

Abstract

The CEEC share of Irish exports has grown fivefold since transition began, with export sales expanding in all sectors. Even at current income levels there remains scope for a further doubling of exports, and trade will grow even more substantially if accession facilitates the CEEC in converging more rapidly on EU living standards. Most analyses predict that the EU15 sectors that face the greatest threats of enlargement‐induced disruption are Food and Textiles, Clothing and Footwear. In the case of Irish Food Processing, however, the prognosis of the present paper is positive since Irish agricultural output differs quite strongly from that of the CEE economies. The adjustment costs associated with industrial dispution, furthermore, are highest in economies with rigid labour markets, whereas the flexibility of the Irish labour market seems to have improved substantially over the last decade or so. Outward FDI from Ireland has grown strongly over the Celtic Tiger era, and Irish multinational firms have been reasonably active in acquiring companies in their sectors in Cental and Eastern Europe. The main worry for Ireland is that the more successful accession states may divert FDI inflows away from Ireland. Micro‐level analysis of the conditions pertaining in some of Ireland's most important foreign‐dominated sectors – information technology, pharma‐chem and instrument engineering – suggests that these threats may be overstated. The leading CEE economies, rather than drawing FDI away from Ireland, may instead contribute to the further development of EU‐wide production networks, making the networks themselves more competitive as global players. The net cost to Ireland of agreements already reached on the financing of enlargement is quite manageable. The cost to Ireland would escalate dramatically, however, if costs and benefits were to be redistributed within the EU in line with current income levels, entailing a substantial transformation of the CAP transfer mechanism.

Suggested Citation

  • Frank Barry, 2004. "Prospects for Ireland in an Enlarged EU," The World Economy, Wiley Blackwell, vol. 27(6), pages 829-852, June.
  • Handle: RePEc:bla:worlde:v:27:y:2004:i:6:p:829-852
    DOI: 10.1111/j.1467-9701.2004.00631.x
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    References listed on IDEAS

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    1. Frank Barry & Holger Görg & Eric Strobl, 2004. "Foreign direct investment, agglomerations, and demonstration effects: An empirical investigation," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 140(3), pages 583-600, September.
    2. Marius Brülhart & Mary J. Kelly, 1999. "Ireland’s Trading Potential with Central and Eastern European Countries - A Gravity Study," The Economic and Social Review, Economic and Social Studies, vol. 30(2), pages 159-174.
    3. George J. Borjas, 2021. "The Economic Benefits from Immigration," World Scientific Book Chapters, in: Foundational Essays in Immigration Economics, chapter 13, pages 411-430, World Scientific Publishing Co. Pte. Ltd..
    4. Ekholm, Karolina & Braconier, Henrik, 2001. "Foreign Direct Investment in Central and Eastern Europe: Employment Effects in the EU," CEPR Discussion Papers 3052, C.E.P.R. Discussion Papers.
    5. John H. Dunning, 1997. "The European Internal Market Programme and Inbound Foreign Direct Investment," Journal of Common Market Studies, Wiley Blackwell, vol. 35(1), pages 1-30, March.
    6. Egger, Peter & Pfaffermayr, Michael & Wolfmayr-Schnitzer, Yvonne, 2001. "The international fragmentation of Austrian manufacturing: The effects of outsourcing on productivity and wages," The North American Journal of Economics and Finance, Elsevier, vol. 12(3), pages 257-272, November.
    7. Paul Brenton & John Sheehy & Marc Vancauteren, 2014. "Technical Barriers to Trade in the European Union: Importance for Accession Countries," World Scientific Book Chapters, in: INTERNATIONAL TRADE, DISTRIBUTION AND DEVELOPMENT Empirical Studies of Trade Policies, chapter 6, pages 105-124, World Scientific Publishing Co. Pte. Ltd..
    8. Frank Barry, 2000. "Convergence is not Automatic: Lessons from Ireland for Central and Eastern Europe," The World Economy, Wiley Blackwell, vol. 23(10), pages 1379-1394, October.
    9. John H. Dunning, 1997. "The European Internal Market Programme and Inbound Foreign Direct Investment," Journal of Common Market Studies, Wiley Blackwell, vol. 35(2), pages 189-223, June.
    10. Barry, Frank, 2002. "FDI, Infrastructure and the Welfare Effects of Labour Migration," CEPR Discussion Papers 3380, C.E.P.R. Discussion Papers.
    11. Angel De La Fuente & Rafael Doménech, 2001. "The Redistributive Effects of the EU Budget: An Analysis and Proposal for Reform," Journal of Common Market Studies, Wiley Blackwell, vol. 39(2), pages 307-330, June.
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    Cited by:

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    2. Kozo Kiyota & Toshiyuki Matsuura, 2006. "Why Is Multinational Status Important? Evidence from Job Creation and Job Destruction in Japan," Working Papers 555, Research Seminar in International Economics, University of Michigan.
    3. Christian Bellak & Rajneesh Narula, 2008. "EU enlargement and consequences for FDI assisted industrial development," Economics Discussion Papers em-dp2008-69, Department of Economics, University of Reading.
    4. Kozo Kiyota & Toshiyuki Matsuura, 2006. "Employment of MNEs in Japan: New Evidence," Discussion papers 06014, Research Institute of Economy, Trade and Industry (RIETI).
    5. John E. Jackson & Bogdan W. Mach & Jennifer L. Miller-Gonzalez, 2016. "Attitudes about EU expansion and zero-sum thinking," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 24(3), pages 481-505, July.

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