Abstract
We consider the impact of the 2004 EU enlargement on enterprise performance and the exporting behavior of German service enterprises in Germany’s eastern border region. Our results from regression adjusted difference-in-differences estimators combined with matching and panel data from official statistics suggest that the EU enlargement had a negative impact on the turnover and export intensity of large enterprises in the border region. For small enterprises, we find an annual increase in turnover by 2.3% in 2004 and an annual decrease in profitability by 1.5 and 1.9 percentage points in 2004 and 2005, respectively.
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Notes
It is worthwhile to note that one cannot expect that all trade barriers between the old and new member states of the European Union have been removed by the enlargement. The European Commission has documented several barriers to trade in services even among the old member states (European Commission 2002). The discussion following the publication of this report ultimately resulted in the passing of the EU services directive (“Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market”). However, for the purpose of this paper it is sufficient that some barriers have been removed by the enlargement.
The results of the probit model are reported in the appendix (see Table 4).
The balancing property, which requires an absence of statistically significant (and economically large) differences between the treatment group and the control group in the covariates after matching, is satisfied (see Table 5 in the appendix).
See for instance the 2004–2006 surveys “Perspectives on Trade and Poverty Reduction,” by the German Marshall Fund where about 50% of German respondents in each year had a unfavorable view of globalization and about one-third reported an unfavorable view of the common market. For an econometric analysis on the relationship between international outsourcing and job loss fears see Frijters and Geishecker (2008).
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All computations were done in the research data centre of the Statistical Office in Berlin. Many thanks to Ramona Voshage for building the data set and her help in many ways.
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Braakmann, N., Vogel, A. The impact of the 2004 EU enlargement on the performance of service enterprises in Germany’s eastern border region. Rev World Econ 146, 75–89 (2010). https://doi.org/10.1007/s10290-009-0042-1
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DOI: https://doi.org/10.1007/s10290-009-0042-1