Advantages and disadvantages of the EU

Existing member states
1. Comparative advantages of new states
  1. Central European location
  2. Lower wage costs
  3. Cheaper unit labour costs
  4. Lower land prices
  5. Attractive tax regime
  6. Success of inward innovation
2. Concerns
  1. Extra budgetary costs for the EU
  2. Issues of new members meeting stricter regulatory standards
  3. Social concerns from immigration
  4. Objective 1 regions lose some of their funding
    1. Spain
    2. Greece
    3. Portugal
Joining member states
1. Membership of the EU single market
  1. Trade
    1. Exploiting comparative advantage to increase trade
  2. Investment
    1. Free movement of capital - looking for the highest return
    2. Inward investment to aid transformation of national infrastructure - impact on a country's LRAS / trend growth
  3. Competition
    1. More competition - boost to labour productivity
    2. Dynamic efficiency gains from faster pace of innovation
2. Financial support
  1. Net recipients of income
    1. Common Agricultural Policy
    2. EU structural funds
    3. Much will help finance investments
3. Macroeconomic advantages
  1. Reduced exchange rate volatility
    1. Slovenia 2007
    2. Cyprus and Malta 2008
    3. Slovakia 2009
General
1. Benefits
  1. Exploitation of economies of scale
  2. More competitive outside the union
  3. Lower labour costs and more productivity
  4. Cleaner environment
  5. Wider access to raw materials
2. Costs
  1. Less flexibility
  2. Higher interdependency
  3. Regulation and beurocracy
  4. Net contributions
  5. Wage compression

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Advantages and disadvantages of the EU

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