The Economic Effect of the EU Eastern Enlargement for Border Regions in the Old Member States

The paper evaluates the impact the EU Eastern enlargement in 2004 had for the economic performance of NUTS2 region located at the border to the new member states. Effects are identified by applying a synthetic control method. It compares the economic performance of these regions with synthetic control groups generated by weighting potential control regions that share the same characteristics of the border regions, but are not located at the border to the new member states. Results show that overall, the EU enlargement had a positive impact for the regional GDP of these border regions. However, when looking at selected region individually, it becomes evident that a heterogeneous treatment effect is at play: While the German region of Lower Bavaria has profited from the EU enlargement, the Italian region of of Friuli-Venezia Giulia reveals a weaker performance than they would have in the absence of the enlargement. This suggests that regions adjust differently to the changes in market access. Furthermore, results indicate that an anticipation effect is at play. Hence, border regions seem to develop differently in the years prior to the enlargemnt than they would have, had the enlargement not taken place.