The task of the study is to analyse the economic consequences of EU enlargement for Bavaria at a regional level. Building on a brief sketch of past economic developments in both Bavaria and the accession countries, macro-level effects of EU enlargement in terms of the impact on aggregate growth, per-capital income and employment are reviewed. Key analyses concentrate on the competitiveness of Bavarian regions and firms. Competitiveness at a regional level is assessed in terms of how different regions are affected by the patterns of sectoral change and how they are endowed with factors that can be regarded the most prominent determinants of growth. Competitiveness of firms is differentiated by branches of industry belonging to the manufacturing sector, the service sector, and the construction sector. Important consequences for regional labour markets can be expected from labour mobility. Therefore, the study contains regionalised estimates of the potential for migrants and commuters following EU enlargement.
Macro-economic consequences of EU enlargement are derived from a survey of earlier studies where, based on Computable General Equilibrium (CGE) models, assumptions regarding changes in international trade are used to estimate the impact on growth and welfare. Regarding the competitiveness of Bavarian regions, recent growth performance of individual branches of industry at a national level is taken as an indicator for the general pattern of sectoral change and the shares in regional employment for both the top-10 and the bottom-10 sectors are accounted for. In addition, the endowment of regions with a number of factors which are shown to explain the development of regional output are illustrated. At a sectoral level, competitiveness is measured in terms of Revealed Comparative Advantages (RCA) based on foreign trade with the accession countries and the EU-15, using these results to calculate “regional” values of RCA. Finally, competitive advantages and disadvantages are evaluated based on a classification of individual branches of industry by their labour intensity, skill intensity, capital intensity, and R&D intensity of output, thus indicating the susceptibility for loosing ground to low-wage competitors.
The analyses mainly build on data that are taken from the system of National Accounts and from official statistics of foreign trade. In a regional perspective, results are reported at a county level (“Kreise”). Regarding sectors of industry, results are differentiated by NACE-2 and NACE-3 categories.
A territorial state like Bavaria in the immediate neighbourhood of some accession states in central and eastern Europe will be particularly affected by economic chances and risks of the EU enlargement. Although Bavaria holds a higher-than-average economic efficiency in international and national competition, the economic development in Bavarian regions did not come up uniformly. Particularly in the north east and east of Bavaria the EU eastern enlargement will confront regions that have difficulty keeping pace with the overall Bavarian development.
Deficits in transport infrastructure, an unfavourable sectoral structure, a lower human capital endowment, a lower patent intensity and in general a below average investment level are fundamental causes for the lower economic potency. Relatively more people in districts of the former border regions are working in comparatively disadvantaged branches. Particularly the wage sensitive branches of the personal services and of the construction industry will be confronted by higher adjustment requirements.
For the construction industry, where the right to offer services will probably have a negative impact on employment, Bavaria border regions show a relatively high employment density. But it should not be forgotten that in the long run potentials for welfare gains exist not only for Bavaria in total but also for the border regions.
The economic centres of Bavaria have good starting conditions for a positive economic development and appear to be well prepared for the EU eastern enlargement. Comparative advantages can be found in southern districts of Swabian, Upper Bavaria and Upper Franconia, in the surroundings of Nürnberg and in most administratively independent towns.
After accession the right of free movement, which is one of the four basic liberties of the single market will result – after relevant transitional arrangements – in temporary or permanent migration of workers. Model projections lead to expectations that three years after accession to the EU and the free movement of labour, at least one million migrants from accession countries will live in Germany of which more than 200,000 will be in Bavaria. After ten years, depending on the income development, the stock rises to 2.6 to three million, of which 490,000 to 570,000 will be in Bavaria. Projections for commuters expect a potential of 46,000 persons for all Bavarian planning regions. This corresponds to a proportion of 0.56% of the population or 1.53% of Bavarian employment.
B. Alecke, H. Hofmann, V. Meier, J. Riedel, F. Scharr, G. Untiedt und M. Werding (2001), Auswirkungen der EU-Osterweiterung auf Wirtschaft und Arbeitsmarkt in Bayern (Final report), Ifo Forschungsbericht Bd. 6, Munich: Ifo Institute.
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