Does the opening of Central and Eastern Europe threaten employment in the west?

The opening up of Central and Eastern Europe posed a profound economic challenge for the European Union (EU). Virtually overnight EU countries were confronted with a group of neighbouring countries with structurally very different economic conditions. The economic system of the Central and Eastern European Countries (CEEC) was built on nearly 50 years of centrally based planning and even more important was the huge gap in income, wages and productivity. Compared to gradual process that characterises post-war European integration, the demise of the Communist legacy represented an abrupt shock. In this paper we investigate the effects of integration with the CEEC. In Section 2 we first discuss how enhanced integration can take the form of increased labour mobility, more trade and an increase in multinational operations. We analyse the employment consequences of those adjustment mechanisms and survey the empirical literature on this subjects. In Section 3 we present our own empirical evidence which is based on a sample of about 300 Belgian firms that developed business activities in CEEC.