@article{Frandsen:330904,
      recid = {330904},
      author = {Frandsen, Søren E and Jensen, Hans Grinsted},
      title = {Economic Impacts of the Enlargement of the European Union  - Analysing the importance of direct payments},
      address = {2001},
      pages = {20},
      year = {2001},
      note = {Presented at the 4th Annual Conference on Global Economic  Analysis, Purdue University, USA},
      abstract = {The preparations for the enlargement of the European Union  to include several of the Central and Eastern European  Countries has led to a discussion of the future design of  the Common Agricultural Policy. This paper addresses this  issue from an economy-wide perspective focusing on the  economic effects of the extent to which the direct payments  are extended to the new member countries. Specifically this  working paper focuses on three enlargement scenarios  ranging from a situation where no direct subsidies are  given to the new member countries to a scenario where the  farmers in the new member states are given the same level  of direct payments as under the existing Common  Agricultural Policy. A third scenario analyses the effects  of reducing the direct payment to two thirds of the  existing level of direct payments in all member countries  (both in the new as well as in the old member countries).  The analyses illustrates that the Central and Eastern  European Countries clearly have a solid potential for  increasing their production of agricultural commodities and  that the extent the direct payments are extended will  affect the supply response in the CEEC’s. It is shown that  the major force behind the significant crop supply response  is due to very large shifts in the use of agricultural  land. It is important to stress that the crucial assumption  behind this result is that there are no – in economic terms  – effective restrictions on the allocation of land and that  the incentives for overshooting the so-called base area  with crops receiving the compensatory payments is very high  given the existing value of hectare premiums. The analysis  also illustrates that enlarging the EU with the existing  CAP is an expensive option in budgetary terms as the level  of CAP related expenditures could increase by one third  thereby exceeding the constraints laid down in the EU  ‘Financial Perspectives’. It should be noted, however, that  the analysis also illustrates that enlarging the Union  leads in all cases to only small overall economic welfare  losses in ‘old’ member states in spite of relative large  increases in ‘old’ member states net contributions.},
      url = {http://ageconsearch.umn.edu/record/330904},
}