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nt part in EU enlargement allowing companies to take advantage of comparative advantages in new Member States and candidate countries. Intra trading has increase from only accounting for a third of EU’s trading in 1960, EU-6, to over 70% of EU’s trade in 2007, EU-25. Intra trading encourages competition, and enhances productivity and efficiency within the EU. With additional new Member States the EU is now the largest trading bloc importing and exporting 16.7% and 18.8% respectively, where as the US is only exporting 11.1% and importing 17.4% (IMF, EUROSTAT 2009). This gives the EU more power when discussing trade policies at the WTO and more influence on the global economy.

FDI plays an important part of EU enlargement and the new Member States GDP growth because an increase of FDI would increase the level of investment, employment and productivity. Breuss (2009) estimated that FDI inflows gave the new States and Member extra growth of 1.75 % GDP on average from period 2000-2008, moreover Bulgaria and Romania could gain an additional 0.5% GDP up to 2020. But other research has shown even though the candidate countries can attract high level of FDI they might not necessarily be able to maintain it, for example in years 2001 and 2002 Cyprus’s FDI inflow rate actually fell by over half and in Malta FDI was actually reversed.

Using Bosnia and Herzegovina as an example if they were to become a member of the EU, the old Member States might have more confident to invest in them, thus rising their FDI rate and unemployment rate, which are the two main underlying issues relating to the economy factors although some issues has to be resolved first like distorted wages setting and low labour mobility which are both halting job creations and the labour market.

Also in Albania unemployment rate is high due to the lack of health and safety regulations which could drive foreign investors away, even though they have currently approved for a strategy for health and safety it will be awhile before it will fully take effect.

From these 2 examples it shows that even though candidate countries have the economy benefits of an EU member such as free trade, but with different underlying issues in each country preventing them from further economic growth it will be a long time before any candidate countries are near the level of expansion. Therefore in conclusion from the economic overview and evidence I think that it is too early for talks about enlarging the EU further and with the 2008 global recession still in effect I think that even if the EU was to expand it would not be in short future and they will have to be extremely careful with the next enlargement.

5.0

This part of the report is going to be discussing the possible benefits, conflicts and problems that enlargement may cause to the citizens of the EU, the existing member states of the EU and the EU at a global level.

In the past, the citizens of the EU didn’t have as much freedom or possibilities to travel freely as they do now. But since the events of “the fall of the iron curtain” or in any of the EU enlargement rounds, more citizens have agreed that the living standards in the Central and Eastern Europe has improved and that the changes from these events have brought more freedom to everybody within Europe (View on European Enlargement – Analytical Report). However some citizens have voted that