The possible effects of the eastern EU-enlargement on Croatia - a trade analysis

Economic integration in Europe will have significant effects not only on participating countries, but also on countries remaining outside of the EU-structures. Starting from the theory of custom union and the trade creation and trade diversion effects, this paper tries to apply the theoretical inferences relating to the countries participating in economic integration to those countries which do not take part in it. The ex ante-analysis focuses mainly on long-term dynamic effects which follow from increasing export possibilities and advantages from economies of scale. Taking into account the foreseen dynamics of trade barriers elimination as well as the effects of trade liberalization so far, the paper estimates the expected effects of further trade liberalization and the adjustment costs arising from increased competition and changing pattern of specialization. In doing so, it makes use of the export similarity index and the methodology of intra-industry trade measurement. Key words: customs union, economies of scale, intra-industry trade, EU, Croatia

Financial Integration and Financial Crisis: Croatia Approaching The EMU

The breakdown of command economies has significantly increased growth potentials all over Europe and opened up prospects for economic development. Encouraged by that, the EU embarked on the process of deeper economic integration. Its main aspects – economic liberalization and monetary integration – coincided with the worldwide globalization of trade and capital flows. As a laggard country in the process of economic integration, Croatia is in a particularly difficult position – besides soaring trade deficit, it is highly indebted and strongly dependant upon foreign capital. Appreciating theoretical inferences and empirical evidence on monetary integration, while taking reference to the realized level of international financial integration and external vulnerability, the aim of the paper is to find out if Croatia fulfils the criteria for successful monetary integration.optimum currency area, financial integration, external balance, EMU, Central and Eastern Europe

Financial Integration and Financial Crisis: Croatia Approaching the EMU

The breakdown of command economies has significantly increased growth potentials all over Europe and opened up prospects for economic development. Encouraged by that, the EU embarked on the process of deeper economic integration. Its main aspects – economic liberalization and monetary integration – coincided with the worldwide globalization of trade and capital flows. As a laggard country in the process of economic integration, Croatia is in a particularly difficult position – besides soaring trade deficit, it is highly indebted and strongly dependant upon foreign capital. Appreciating theoretical inferences and empirical evidence on monetary integration, while taking reference to the realized level of international financial integration and external vulnerability, the aim of the paper is to find out if Croatia fulfils the criteria for successful monetary integration

Effects of Trade Liberalization in Croatia: An Approximation of the Integration Effects with the EU

Economic integration can cause significant adjustment costs and call for economic structure flexibility which will make the relocation of production factors within or between industries less expensive. Based on new trade theory, the integrated economy approach allows an insight into different patterns of trade as an approximation of the expected adjustment costs. In light of the EU-enlargement and the expected Croatian accession the aim is to analyse the effects of Croatian trade liberalization in order to stress the importance of structural adjustment in the process of economic integration and point at industries which will be exposed to significant adjustment costs

The possible effects of the eastern EU-enlargement on Croatia - a trade analysis

Economic integration in Europe will have significant effects not only on participating countries, but also on countries remaining outside of the EU-structures. Starting from the theory of custom union and the trade creation and trade diversion effects, this paper tries to apply the theoretical inferences relating to the countries participating in economic integration to those countries which do not take part in it. The ex ante-analysis focuses mainly on long-term dynamic effects which follow from increasing export possibilities and advantages from economies of scale. Taking into account the foreseen dynamics of trade barriers elimination as well as the effects of trade liberalization so far, the paper estimates the expected effects of further trade liberalization and the adjustment costs arising from increased competition and changing pattern of specialization. In doing so, it makes use of the export similarity index and the methodology of intra-industry trade measurement. Key words: customs union, economies of scale, intra-industry trade, EU, Croati