Economic Integration and Vulnerability in the Neighbourhood

In 2004, the EU launched the European Neighbourhood Policy (ENP), a unified policy framework towards its neighbours in the external EU periphery, aiming at strengthening prosperity, stability and security around its geopolitical borders. However, in-depth empirical analysis provides clear-cut evidence that, while the size and composition of trade flows between the EU and the ENCs may be growing, they are not favourable for the ENCs from the perspective of export diversification, in terms of either products or number of destinations. This condition increases their exposure to volatility in international markets. These results provide valuable insight into economic integration theory and for policymaking.
Keywords: EU, ENP, integration, trade, diversification, vulnerability