w 109 long-run economic aspects of the european union's eastern ...

LONG-RUN ECONOMIC ASPECTS OF THE EUROPEAN UNION’S EASTERN ENLARGEMENTNOTES1 Note that ‘political’ union is mentioned, even though EU members do not knowwhat that is. In the run-up to the Maastricht treaty, the negotiations on ‘politicalunion’ (as an identifiable notion) were abandoned!2 By no means all, as the November report on Turkey emphasises, e.g. in agriculture,energy and parts of banking.3 It is fair to notice that the political and economic damage caused byCeaucescu’s repression was incomparably greater than in other Comecomcountries.4 See EBRD, Transition Report (1999) and e.g. Wolf, (1999).5 Institutions in the sense of the appropriate legal and institutional frameworkfor markets to function properly and in the sense of institutions and agenciesentrusted with ensuring enforcement and legal certainty.6 This quotation from EBRD (1999, p. 5) provides a definition and illustrations:“Social capital may be defined in terms of: voluntary compliance with establishedlaws, trust, co-operative behaviour and basic codes of conduct. By usingthe language of capital, we emphasise both that it can be enhanced or erodedand that it can complement other factors of production, such as physical andhuman capital. Defined in this way, social capital can be seen to be fundamentalto the development of institutions. Furthermore, appropriate institutionscan preserve and foster social capital. With weak social capital, physicalcapital is abused, destroyed or misappropriated and human capital can bewasted and diminished. Manifestations of weak social capital include: bureaucraticinterference of various kinds, especially harassment by the tax authorities;behaviour by those involved in the judiciary which undermines itseffectiveness; corruption and other deficiencies in law and order; and unsoundor dubious business practices, including asset-stripping and poor corporategovernance”. See also, Bos, Gelauff & de Mooij (1999)7 See the forthcoming WRR working Document by Blankenburg.8 The following is based on, besides the Regular Reports, work done in the CEPSWorking Party on ‘The environment in European enlargement’, withWolfgang Hager as rapporteur. At the time of writing this Working Partyreport was still at the drafting stage.9 The colloquial use of the word ‘standard’ is not appropriate for the understandingof the issues in this subsection. A ‘standard’ (in ISO and in the EU ) is avoluntary agreement about particular technical specifications, achieved byconsensus in a private standards body, which adheres to strict procedures ofpublic inquiry and transparency. A European standard is one adopted by CEN,CENELEC or ETSI; it replaces previously existing national standards, if any; suchstandards can be a ‘presumption’ of compliance with the ‘essential (e.g. safety)requirements’ of New Approach directives (following ‘mandates, etc.), but inmany product markets such standards have no relation with EC regulation andmerely serve perceived market needs.10 Since most of these standards are ‘performance’ standards (and not ‘design’standards), many designs or new ideas are often compatible with Europeanstandards. The incentive to innovate ‘around’ the standard is therefore very