East–West European Integration: A General‐Equilibrium Analysis of Alternative Agricultural Policies

Abstract

This paper studies the budgetary and trade implications of European Union (EU) membership of Eastern European countries under various agricultural policy scenarios. The author uses a six-region, 13-sector general-equilibrium model with many explicitly modeled agricultural and trade policies. It is found that EU membership of Eastern European countries, including their adoption of the EU's Common Agricultural Policy (CAP), leads to a surge in Eastern Europe's agricultural exports. Moreover, the EU's agricultural expenditure increases by 26%. A reform of the CAP following the Agenda 2000 proposal does not reduce the cost of enlargement if Eastern European farmers receive compensation payments.

The impact of agricultural productivity increases in the former Soviet Union and Eastern Europe on world agricultural markets

“…Our elasticities are based on a literature review and adopted estimates that fall in the range of elasticities used in the models. Weyerbrock (1994) documents the elasticity sources consulted.…”

“…To capture recent policy changes we use the most recent policy data available. Weyerbrock (1994) details our data sources. Elasticity estimates were drawn from the literature.…”

Enlarging the European Union

“…Also, the policy simulations which we have in mind do not cause strong growth or income effects so that the mentioned drawback of using a CBS-function will not be very distinctive. Weyerbrock (1994Weyerbrock ( , 1995 eventually also abstains from using the AIDS import demand form because of the difficulties mentioned of finding the required data. As a matter of fact a CGE-study by Breuss and Tesche (1996) which actually uses the AIDS specification for analysing a very similar formulation finds that the "[ ... ] results mostly support those of Weyerbrock (1995)" 50 • Thus the functional form of the import demand function is only of minor relevance.…”