20 years on: what EU accession has done for us

EU accession
Image: Adobe Stock

Six investment promotion leaders from countries that acceded to the EU in 2004 reflect on two decades of membership.

On 1 May 2004, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia, and Slovenia joined the European Union. It was the biggest enlargement in the EU’s history.

On the 20th anniversary of this significant moment in European history, investment promotion leaders from the accession countries reflect on the impact EU membership has had on their investment dynamics.

Jan Michal, chief executive, CzechInvest

EU accession

Over the past 20 years, Czechia has undergone a significant transformation and made substantial economic progress, retaining its leading position among Central and Eastern European countries.

Together with the country’s accession to the European Union in May 2004, integration into the EU internal market and access to EU funding and programmes, business innovations have strengthened the Czech economy and provided new opportunities for trade with other EU countries and for joint projects with European partners.

A resounding acknowledgement of Czechia’s success was the EU’s decision to locate in Prague the headquarters of the Agency for the Space Programme (EUSPA), which provides the Galileo global navigation satellite system among other services.

Thanks to its strategic location in Central Europe, robust industrial sector, strong technology and research base, skilled and educated labour force and well-developed infrastructure, Czechia has become an attractive destination for FDI. For example, one-third of the world’s electron microscopes are now manufactured in the country’s second-largest city, Brno.

Czechia has not only become attractive to companies operating in the advanced manufacturing industry, but also hosts a number of new shared-services centres and investment projects driving technological progress, such as the BMW Group’s Future Mobility Development Center in the Karlovy Vary region. The facility helps to develop innovations in alternative motive power sources and autonomous mobility technologies.

Czechia’s membership of the EU enhances the attractiveness of the many business opportunities the country has to offer. As a leading investment-promotion agency in the CEE region, CzechInvest strives to foster the development of Czech-based companies, thus also strengthening the country’s economic growth and competitiveness.

Marios Tannousis, chief executive, Invest Cyprus

EU accession

Over the past two decades, Cyprus has transformed into a premier investment destination, significantly bolstered by our accession to the European Union. Joining the EU catalysed this transformation by providing a stable, predictable, and regulated environment, which has instilled confidence among international investors.

The benefits of EU membership have been multifaceted, enabling the expansion and diversification of our investment sectors. Notably, this includes the establishment of the funds and asset management sector, and the advent of multinational corporations setting up headquarters in Cyprus, particularly technology companies – positioning it as a leading tech hub in the region.

In addition, we have seen substantial investments in education, from elementary schools to universities, and significant advances in the healthcare sector, which have collectively enhanced quality of life on the island. And there has been a surge in foreign investments in our traditional sectors – tourism & hospitality and shipping – which continues to drive our economy forward.

Cyprus stands as one of the top three countries globally in terms of post-pandemic recovery. With the Vision 2035 initiative, we are committed to elevating Cyprus into one of the foremost countries to live, work, and conduct business in.

Our ongoing efforts at all levels aim to sustain and enhance the attractive investment climate we have nurtured, ensuring that Cyprus remains a strategic hub for foreign direct investment.

Robert Simoncic, chief executive, Slovak Investment and Trade Development Agency

Slovakia can offer a great value proposition for a new investor. A strategic location with great export potential, developed infrastructure, cost-effective, skilled, and loyal labour force, as well as ability to quickly adapt to new technologies are just some of our competitive advantages.

Our EU membership has contributed to a more favourable investment climate. Immediately after 2004, in four consecutive years, we saw a twofold increase in the number of FDI projects administered by the Slovak Investment and Trade Development Agency (SARIO). In 2023, nearly half of the successfully delivered investment projects originated in EU countries.

The adoption of EU fiscal and monetary policies also enhanced macroeconomic stability and conditions for long-term business decisions. A stronger flow of foreign investors naturally supported
the country’s economic development and growth.

Slovakia’s entrance into the EU also provided foreign investors with access to a large and integrated market, and enhanced regulatory and political stability. Over the past two decades, we successfully concluded more than 660 projects that led to the creation of almost 150,000 jobs and investments of more than €16 billion.

Laura Štrovalde, deputy director, investment and energy, Investment and Development Agency of Latvia

After Latvia acceded to the EU, the inflow of FDI increased rapidly and, in 2023, reached its highest point (€24.5 billion). Most of this FDI comes from other EU member states – it represented 83.5% of all accrued FDI at the end of 2023.

One of the key drivers behind the influx of foreign investment into Latvia following EU accession has been the unparalleled access to the vast European market that membership provides.

By joining the EU, Latvia gained access to a single market of more than 500 million consumers, offering opportunities for businesses to expand their operations, access new customers, and forge strategic partnerships across borders. Many foreign companies use Latvia as an entry point to the EU market.

Furthermore, EU membership has provided Latvia with access to vital funding streams and resources through cohesion and structural funds. These financial instruments have been crucial in supporting infrastructure development, promoting innovation, and fostering entrepreneurship, creating an enabling environment for foreign investors seeking stability and growth potential.

Moreover, EU membership has served as a seal of approval for Latvia’s commitment to democracy, rule of law, and sound economic governance, instilling confidence among foreign investors and mitigating political and regulatory risks. This credibility boost has attracted foreign direct investment and enhanced Latvia’s reputation as a reliable and transparent business destination in the eyes of the international community.

Finally, EU accession has facilitated the harmonisation of Latvia’s legal and regulatory framework with European standards, reducing barriers to trade and investment and improving the ease of doing business here. This alignment with EU norms and regulations has streamlined business operations and fostered a more competitive and business-friendly environment, further incentivising foreign investment.

Joonas Vänto, director, Estonian Investment Agency

Over the past three decades, Estonia has evolved into a smart, agile investment hub that consistently ranks as a world leader in human capital, digital capability, and ease of doing business.

In 2023, the Estonian Investment Agency, which celebrates its 30th anniversary this year, helped bring €336 million worth of FDI into Estonia. That’s just a little shy of the all-time record – which we hit the year before.

Foreign investors are, of course, attracted by the stability of Estonia’s business environment, favourable tax policies, and educated workforce. But we don’t take this success for granted – with the landscape as competitive as it is, it’s crucial to keep innovating and blazing a trail as an investment promotion agency.

As such, we continue to develop and use advanced digital tools and AI to improve the overall user experience and stay a step ahead of the FDI curve.

Vida Staskonienė, director of business development, Invest Lithuania

EU membership granted Lithuania access to the single market, propelling it into the role of an international business hub for the entire Baltic region.

Notably, Lithuania has emerged as a prime destination for foreign direct investment within the EU. The Greenfield FDI Performance Index ranked Lithuania second in the EU for 2023.

Today, the country boasts a thriving global business services industry, a robust manufacturing sector, and acts as a hub for innovative companies in sectors such as fintech and life sciences.

The country continues to evolve, focusing on attracting high-value foreign investment projects and aspiring to take a leading position in emerging industries including green technologies, defence,
and cybersecurity.