The Impact of EU Enlargement on the Location of Production in Europe

Summary:

This paper studies the impact of EU enlargement, focusing on the evolution of corporate strategies and their influence on the location of production within the EU-25. Part examines the evolution of trade and FDI between the EU-15 and accession countries over the last decade. Beyond increasing flows, it shows that European firms have been implementing vertical specialization within the regional area. It compares Germany and France in particular in this respect. It finally sets intra-EU-25 trade in perspective by emphasizing the dynamism of trade with China. Increasing trade with China and the development of both European and global production networks are discussed in more details in part 2.Part 2 focuses on three sectors: the automobile industry, information and communication industries, and textile and clothing. These sectoral studies allow for a more detailed examination of the determinants and consequences of firms' location decisions. All three studies do show a shift of production facilities eastward, but each is also specific.The conclusion deals with the current debates in France and Europe about the relocation of production in new members and the relevance of the policies that have considered by some countries.

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