The implications of european integration and adjustment for border regions in accession countries

International trade and Foreign Direct Investment (FDI) - the two driving forces behind economic integration - have undoubtedly had a considerable impact on the economy, at both national and regional levels. The possibility to exchange goods and services internationally opens opportunities to specialize and to use economies of scale and therefore may result in the concentration of economic activities in a few locations close to international markets. Furthermore, trade occurs in a heterogeneous space, where distance and quality of infrastructure matter, so integration may have different consequences for the center and the periphery. Even more than trade, FDI affects the domestic economy through technical - transfer of technology, skills, knowledge and governance - as well as pecuniary - backward and forward linkages with domestic firms - externalities, which may generate positive spillovers to domestic economies. Since, however, FDI tends to cluster geographically in Central and Eastern Europe (Resmini, 2000), it can generate or further increase regional disparities within candidate countries.