CEU Electronic Theses and Dissertations, 2025
| Author | Sapkota, Ranjan |
|---|---|
| Title | The Cost of Delay: A Synthetic Control Study of Croatia's Missed GDP per Capita Gains from Early EU Accession |
| Summary | This thesis explores the effect of Croatia’s hypothetical accession to the European Union in 2004 on GDP per capita, using the Synthetic Control Method (SCM). A counterfactual is constructed to estimate how GDP per capita in Croatia would have evolved in the absence of delayed EU membership. We construct a “Synthetic Croatia” as a weighted average of the ten 2004 accession countries, matching Croatia’s GDP per capita and eleven macro-economic predictors (including lagged GDP per capita, FDI, inflation, tax revenue, exchange rate depreciation, employment, exports, labor-force participation, and consumption expenditure) over 1995–2000. To ensure robustness, we conduct a pre-treatment fit validation test: computing weights on 1995–2000 and forecasting into 2001–2003 yields an out-of-sample RMSE of 349.15 (under 3.5 % of the average GDP per capita), demonstrating strong predictive accuracy and confirming the credibility of our counterfactual before accession. Comparing actual and synthetic GDP per capita from 2004 to 2012, we find that Croatia underperformed its early-joiner countries by an average of USD 1,466.08 per person—a 10.6 % shortfall. In-space placebo tests, which repeat the SCM for each donor country as if it had joined in 2004, produce no similarly large or persistent post-2004 gaps, underscoring the statistical significance of Croatia’s divergence. Our results suggest that Croatia’s delayed accession caused a substantial opportunity cost in terms of foregone GDP growth. An analytically, this study contributes to the SCM literature by quantifying the economic penalty of postponed EU membership for a late-joiner economy, offering lessons for future enlargement and integration policies |
| Supervisor | Reiff Adam |
| Department | Economics MA |
| Full text | https://www.etd.ceu.edu/2025/sapkota_ranjan.pdf |
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