Institutions and EU Accession : How Countries Prosper Even Before Entry

Overview & Synopsis

The prospect of European Union (EU) membership has long been the most potent external anchor for governance reforms for EU candidate countries. Existing empirical work has shown that the link between EU accession and compliance with the EU body of law (acquis) has been the principal lever that has reshaped candidate countries’ institutions and legal frameworks. Meeting the accession criteria obliges accession countries to strengthen their institutions well before formal entry, enhancing regulatory predictability, creating a level playing field, and ensuring contract enforcement. More than a decade after the last enlargement round, the question is no longer whether requirements to adopt the acquis can catalyze reforms, but to what extent accession continues to deliver measurable and durable institutional gains amid a more challenging geopolitical environment and evolving enlargement policy. In this context, this note aims to contribute to the discussion by looking at the institutional gains both before and after EU accession across the last three EU enlargement rounds (2004, 2007 and 2013) and offering lessons for the current EU candidate countries. Two important findings emerge from the analysis. First, there is a robust and statistically significant improvement in the quality of governance for countries that have joined the EU. This result is consistent across the three enlargement rounds and across different model specifications. Second, some of the most notable improvements in governance—at least until today—occurred before EU accession. Countries that aspire to join the EU undertake governance reforms as part of the accession process itself, which in turn increases their likelihood of meeting EU membership criteria. This pattern reflects mutual reinforcement and aligns with the view that governance progress and accession prospects move together under the force of conditionality. This underscores the value of leveraging governance reforms to crowd in investment, raise productivity and create jobs, and reinforce a stable, predictable business environment for today’s EU candidate countries. The rest of the note proceeds as follows. Section 2 offers a brief literature overview and section 3 describes the data sources used. Section 4 outlines the methodological approaches and the results obtained from the estimations. Section 5 concludes and discusses possible implications for the current EU candidate countries.