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The Impact of Eastern Europe

Monitoring European Integration 1

By David Begg and et al.

The first major study of how developments in Eastern Europe would affect the economies of Western Europe and the process of economic integration among them. The first section focuses on the medium- and long-term implications of the current transformation of Eastern Europe for European production and trade. It also assesses the implications of change in Eastern Europe for EC trade and industrial policies and the likely magnitude of East European trade with the West, given the current state of the capital stock and the potential for industrial restructuring. The Report analyses Eastern exports of energy and agricultural goods, the future of the CAP, and competition between Eastern and Southern Europe. The second section of the Report assesses the medium-term macroeconomic impact of the transformation of the East European economies, focusing on issues such as the consequences of German reunification, East European spending on consumption versus investment, and the likely impact on the EMS of the flows of new investment and capital goods from the West into Eastern Europe. Here the Report assesses the implications of reform in the East for interest rates, pressures for DM realignment, and the case for accelerating EMU in response to the ‘Eastern Europe shock’.

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