EXTENSION OF THE EUROPEAN-UNION - COSTS AND BENEFITS FOR THE EUROPEAN-UNION AND FOR THE COUNTRIES OF CENTRAL AND EASTERN-EUROPE

Nationally fragmented Europe used to be a territory producing contradi ctory economic interests that were expressed by policy, and wars were defined as continuation of policy by other means. Thus from all aspect s, one can consider integration processes in Western Europe as the mos t important positive socio-economic process going on in the European c ontinent. In this context these processes have not only a European dim ension, but their global influence manifests itself worldwide. In the years to come there is an outlook of the extension of the European Uni on (EU) from 15 countries up to 26 countries; membership applications arrived ii om the countries of Central and Eastern Europe (CEEC - Hung ary, Poland, Romania, Slovakia, Latvia, Lithuania, Estonia, Bulgaria, Czech Republic and Slovenia) as well as Cyprus. There is no doubt abou t the historic significance of the EU extension that is being prepared . Never before, however, did the EU expect extension of such an extent . This extension means that to the present 370 million EU inhabitants, an additional 100 million will come from various economic and social backgrounds. Moreover, the average per capita national income of Centr al and East European countries (CEEC) is only about 30-40% of the EU a verage. Thus the extension process is a complex and complicated affair , mainly from the economic point of view. European Union extension to the east, however, constitutes the central column of the European arch itecture. Geopolitical factors from the EU point of view present the m ain motivation factors and a motor driving the enhancement of the conc eptual orientation mentioned above. On the other side, economic and fi nancial factors present obstruction to the EU extension, as they const itute additional and not inconsiderable economic and financial costs. Central and East European countries under consideration for EU extensi on differ economically from the fifteen countries of EU (EU 15). For i nstance, the share of agriculture in EU 15, in the overall structure o f created GDP, amounts to half the percentage of the CEEC share, the e conomic level of EU 15 expressed in GDP per capita is two-and-half tim es that achieved in CEEC. Substantially lower GDP per capita income in CEEC reflects above all the considerably lower level in labour produc tivity. Most of this difference results also fi om the lower level of capital and technology equipment of CEEC. In most of CEEC potential po ssibilities of additional investments into modernization of machines a nd equipment, as well as into an increased qualification level of work ing population, are leading most of the professional economic public t o favourable forecasts of the dynamics of CEEC economic growth This dy namics of GDP growth can be twofold or threefold compared to the dynam ics expected in Western Europe. This economic growth difference can gr adually narrow down also income differentials, e.g. differences in rea l income level. Nevertheless, the richest CEEC will need decades befor e they reach the economic level of the EU 15 average. Budget estimates issuing from the current state of expenditure rules of EU would in th e case of CEEC 5 (Czech Republic, Slovak Republic, Hungary, poland, Sl ovenia) be as follows: 10 billion ECU per capita and 13 billion ECU st ructural expenditures, e.g. 23 billion ECU altogether. From the point of view of the additional loading of the EU budget such an expenditure appears unreal. Extension of EU by CEEC 5 amounting to less than 5 bi llion ECU per capita and 9.7 billion ECU for structural expenditures s eems to be adequate. Net costs of CEEC 5 membership should therefore a mount to about 7.5 billion ECU (e.g. incomes 14.13 billion ECU and pay ments into the EU budget 6.68 billion ECU). Cited budget estimates sta rt from the current state of EU expenditure rules. They are, after all , reduced by the current economic situation and assumed, or as the cas e maybe, defined by the monopolistic position of the EU member countri es. Should one use rationally, e.g. for the import of machines and equ ipment and for overall modernization, the 560 billion Sk volume of fin ancial resources for the Slovak Republic, which is the lowest realisti c option for a 10 year period, the result should positively manifest i tself in an improved technology and economic standard of Slovakia. To these direct benefits accede further benefits approximately quantified in the preceding analysis. The export dynamics will increase and the GDP will grow by at least 1.5% p.a. Should there be in the next ten ye ars GDP growth of about 6% p.a., the influence of EU membership would raise this figure up to 7.5% p.a. Further economic benefits are expect ed in the sphere of greater inflow of foreign direct investments as a result of the decrease of so called risk premium. A new member state o f the EU is rated as fully safe (riskless) region for the entrance of foreign capital. Listed direct and indirect economic benefits follow f rom the programmed reduction of differences in the economic level of E U member countries. This reduction is based on the formation of optimu m conditions for less developed countries, to enable them to approach gradually the level of economically developed countries.