This publication explores the economic consequences of the fifth and most recent enlargement of the European Union (concluding last January with the entry of Bulgaria and Rumania) for existing member countries, particularly Spain. Starting from an exhaustive study of the most relevant statistical sources, the text addresses a series of closely interconnected issues that are crucial for the ability of the Spanish economy to compete successfully with the New Member States (NMS).

Among them, the direction of international trade exchanges, adjustments in investment flows, the geographical destination of foreign direct investment and, above all, changes in the spatial concentration and specialisation of production and services, as the multinational companies press on with their delocalisation strategies. The authors discuss the way ahead for the Spanish economy in this new context. The relative similarity between Spain’sproductive structure and those of the NMS will bring more competitive pressures to bear on Spanish exports to EU-15 countries. The relative erosion of the country’s cost advantages will need to be offset by other routes; specifically higher productivity, better product and service differentiation, and improvements in the quality of human and technological capital.