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The Positive Border Effect of EU Integration

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Author Info

  • Steven Brakman
  • Harry Garretsen
  • Charles van Marrewijk
  • Abdella Oumer

Abstract

Distance related variables typically vary in a cross-section dimension but less so in a time dimension across cities, regions, or countries. The enlargement of the EU or the introduction of the euro, however, can be looked upon as integration shocks that are informative of the consequences of changes in distance over time. Border cities or regions are thought to be more affected by these shocks than more central locations because of the larger impact of changes in the transaction costs that go along with EU integration along the border. Both at the urban and regional level, we find a beneficial influence of the EU integration process as measured by the growth in population share along the integration borders, leading to an extra growth rate of about 0.15 percentage points per annum. The positive integration holds on both sides of the integration border, is active for a limited distance (up to 70km) and time period (up to 30 years), and is particularly important for large cities and regions. Despite the positive EU integration effect, being located along a border remains a burden in view of the (larger) negative general border effect. We do not find similar positive border-integration effects as a result of the introduction of the euro.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2011/wp-cesifo-2011-01/cesifo1_wp3335.pdf
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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3335.

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Date of creation: 2011
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Handle: RePEc:ces:ceswps:_3335

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  1. Bosker, Maarten & Buringh, Eltjo & van Zanden, Jan Luiten, 2008. "From Baghdad to London: The Dynamics of Urban Growth in Europe and the Arab World, 800-1800," CEPR Discussion Papers 6833, C.E.P.R. Discussion Papers.
  2. van Marrewijk, Charles, 2006. "International Economics: Theory, application, and policy," OUP Catalogue, Oxford University Press, number 9780199280988.
  3. Gabriel M. Ahlfeldt & Stephen J. Redding & Daniel M. Sturm & Nikolaus Wolf, 2012. "The Economics of Density: Evidence from the Berlin Wall," SERC Discussion Papers 0118, Spatial Economics Research Centre, LSE.
  4. Maarten Bosker & Harry Garretsen, 2010. "Trade costs in empirical New Economic Geography," Papers in Regional Science, Wiley Blackwell, vol. 89(3), pages 485-511, 08.
  5. Maarten Bosker & Steven Brakman & Harry Garretsen & Marc Schramm, 2005. "Looking for Multiple Equilibria when Geography Matters: German City Growth and the WWII Shock," CESifo Working Paper Series 1553, CESifo Group Munich.
  6. Desmet, Klaus & Rossi-Hansberg, Esteban, 2007. "Spatial Growth and Industry Age," CEPR Discussion Papers 6421, C.E.P.R. Discussion Papers.
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