Predicting European enlargement impacts - A framework of interregional general equilibrium

Although the Computable General Equilibrium (CGE) model is not a new tool i n analyzing policy impact, it has not yet gained wide popularity in regiona l applications such as rural economies. This study demonstrates, however, t hat a regional CGE model can be a quite useful regional development plannin g tool for analyzing the impacts of changes in global economic conditions a s well as for assessing the interregional and intersectoral implications of potential policy changes even with limited computational resources and lac king a full range of regional economic data required by a formal CGE analys is. In our empirical analysis we have found that the rural economies of the Central and Eastern European (CEE) accession countries have to expect the largest we tare gains from integration into the European Union (EU) in the case of gradual market opening in comparison with the continuation of curre nt policy and the complete liberalization of markets. Because agricultural markets are highly protected in the EU, above all, the rural regions of the CEE countries will gain from integration into the EU.