Ifo Institute: EU’s Eastward Expansion Boosts Trade with Germany

The integration of Central and Eastern European (CEE) states in the European Union had a positive effect on trade relations between Germany and the accession countries. Economically stronger countries like Poland (exports + 216 percent) and the Czech Republic (exports + 156 percent) have seen sharp increases in their trade with Germany since joining the EU in 2004. The same can be said of Rumania and Bulgaria. The upturn in trade between the Baltic States and Germany, by contrast, was far smaller.

Part of this positive effect is directly due to the EU accession of CEE states. Federal states in eastern Germany benefitted disproportionately from CEE membership due to their historical trade relations and their geographical proximity to Eastern Europe. Exports by eastern German federal states to CEE countries rose by 17 percent following the latter’s EU accession, while exports by western German federal states increased by just 6 percent. A similar pattern can also be seen in imports.

These are the findings of research by Jaqueline Hansen and Katharina Heisig from Ifo Dresden.  A detailed article on this topic is featured in issue 05/2018 of “Ifo Dresden berichtet” that has just been published. The articles (in German) in the issue can be downloaded free of charge here.