Western EU countries have certainly helped eastern ones (“second world” countries) through four main mechanisms:
1. Tourism
2. Mass migration
3. Regulatory arbitrage
4. Direct market access
To take an example, Croatia is a country of 3.8 million with a GDPpc PPP of >usd 50k.
But it does not produce anything significant.
30% of the gdp is tourism + remittances. The emigration is so high that the country is losing population. There are more Croats that live outside Croatia than within it.
Regulatory arbitrage comes through obscure EU standards that would preclude companies in, say, China or India or Indonesia from participating in certain economic activities.
As an example, the latest amendments to EU’s waste shipment regulations require that lithium-ion batteries be only recycled in OECD countries.
This is ostensibly on “environmental” grounds but again the truth is that this is just economic protectionism.
This means limiting options to low cost eastern european countries for basic pre-processing and then shipping intermediate products to Korea or Japan for final processing.
This is because EU simply doesn’t have the cost structures for this kind of commoditized activity.
This is very ironic because China or India actually have excess capacity and do meet EU environmental standards but EU doesn’t want to let them in, which is understandable. But it is not stated as such.
Anyway so the bottomline is that the eastern european countries live off these scraps of the western euro ones.
It’s a sweet deal for everyone. Citizens of second world countries get to emigrate to first world without friction. First worlders get lower cost workers who are less troublesome than Moroccans or Algerians.
But ultimately this leads to de-population of the second world and de-industrialization of the first world.
I agree that the old EU has certainly helped the new/eastern EU countries by giving them market access and allowing free movement of people within the EU. And this has worked very well at raising living standards in Eastern Europe.
On the other hand, tourism is a good example of Croatians (and other eastern euros) helping themselves. Even before joining the EU in 2013 (in fact, to a limited degree during communist times), Croatia was already an international tourist destination, and developing their tourist industry depended on them, not on the old EU.
I also don't think that tourism's relatively high share of total GDP (10%-15%) is a problem. It's similar to the share of tourism in all other southern European countries (assuming for a moment that Croatia is a southern European country from a sun and beaches point of view). That wouldn't make me conclude that southern European countries produce nothing significant.
Then the question becomes: what happens to this money? Who benefits from it? Surely it doesn't evaporate.
Western EU countries have certainly helped eastern ones (“second world” countries) through four main mechanisms:
1. Tourism
2. Mass migration
3. Regulatory arbitrage
4. Direct market access
To take an example, Croatia is a country of 3.8 million with a GDPpc PPP of >usd 50k.
But it does not produce anything significant.
30% of the gdp is tourism + remittances. The emigration is so high that the country is losing population. There are more Croats that live outside Croatia than within it.
Regulatory arbitrage comes through obscure EU standards that would preclude companies in, say, China or India or Indonesia from participating in certain economic activities.
As an example, the latest amendments to EU’s waste shipment regulations require that lithium-ion batteries be only recycled in OECD countries.
This is ostensibly on “environmental” grounds but again the truth is that this is just economic protectionism.
This means limiting options to low cost eastern european countries for basic pre-processing and then shipping intermediate products to Korea or Japan for final processing.
This is because EU simply doesn’t have the cost structures for this kind of commoditized activity.
This is very ironic because China or India actually have excess capacity and do meet EU environmental standards but EU doesn’t want to let them in, which is understandable. But it is not stated as such.
Anyway so the bottomline is that the eastern european countries live off these scraps of the western euro ones.
It’s a sweet deal for everyone. Citizens of second world countries get to emigrate to first world without friction. First worlders get lower cost workers who are less troublesome than Moroccans or Algerians.
But ultimately this leads to de-population of the second world and de-industrialization of the first world.
I agree that the old EU has certainly helped the new/eastern EU countries by giving them market access and allowing free movement of people within the EU. And this has worked very well at raising living standards in Eastern Europe.
On the other hand, tourism is a good example of Croatians (and other eastern euros) helping themselves. Even before joining the EU in 2013 (in fact, to a limited degree during communist times), Croatia was already an international tourist destination, and developing their tourist industry depended on them, not on the old EU.
I also don't think that tourism's relatively high share of total GDP (10%-15%) is a problem. It's similar to the share of tourism in all other southern European countries (assuming for a moment that Croatia is a southern European country from a sun and beaches point of view). That wouldn't make me conclude that southern European countries produce nothing significant.