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Complex Europe: Quantifying Cost of Disintegration

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  • Gabriel Felbermayr
  • Jasmin Gröschl
  • Inga Heiland

Abstract

On 1 January 2023, Croatia became the newest member of the Schengen Agreement of the European Union (EU) and also joined the Eurozone. This will not only mean a new currency and the elimination of border controls – allowing thus free movement within the Schengen area. It will also mean reductions in barriers to trade between Croatia and other EU member states. The Schengen Agreement and the Eurozone are part of the engine of European integration, namely the reduction of trading costs between the member countries in various dimensions as well as in trade with third countries. This includes the European Customs Union, the European Single Market, the Eurozone, the removal of customs barriers in the Schengen area and the EU’s free trade agreements with third countries – all of which are milestones that have created the world’s largest free-trade area in terms of value added. This article aims to highlight the importance of reducing trade costs and show what far-reaching effects a reversal of the European integration process through a gradual dismantling of these milestones would have on trade, production, and income across the EU member states and their trading partners.

Suggested Citation

  • Gabriel Felbermayr & Jasmin Gröschl & Inga Heiland, 2023. "Complex Europe: Quantifying Cost of Disintegration," EconPol Policy Brief 48, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    • Handle: RePEc:ces:econpb:_48
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    Cited by:

    1. Gabriel Felbermayr, 2023. "Krieg mit anderen Mitteln," WIFO Monatsberichte (monthly reports), WIFO, vol. 96(2), pages 111-122, February.
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    3. Kerényi, Ádám & Gulácsi, Gábor, 2023. "Magyarország elfordulása az Európai Unió derékhadától és az Unió válaszai [Hungarys turning away for the European Union and the EUs response]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(10), pages 1131-1172.
    4. Sonali Chowdhry & Julian Hinz & Katrin Kamin, 2022. "Brothers in arms: The value of coalitions in sanctions regimes," RSCAS Working Papers 2022/62, European University Institute.
    5. Felbermayr, Gabriel & Gröschl, Jasmin & Heiland, Inga, 2022. "Complex Europe: Quantifying the cost of disintegration," Journal of International Economics, Elsevier, vol. 138(C).
    6. Ricardo Hausmann & Ulrich Schetter & Muhammed A. Yildirim, 2022. "On the Design of Effective Sanctions: The Case of Bans on Exports to Russia," CID Working Papers 417, Center for International Development at Harvard University.
    7. de Lucio, Juan & Mínguez, Raúl & Minondo, Asier & Requena, Francisco, 2024. "The negative impact of disintegration on trade: The case of Brexit," European Economic Review, Elsevier, vol. 163(C).
    8. Peter Eppinger & Gabriel J. Felbermayr & Oliver Krebs & Bohdan Kukharskyy, 2021. "Decoupling Global Value Chains," CESifo Working Paper Series 9079, CESifo.
    9. Felbermayr, Gabriel & Krebs, Oliver, 2023. "Der volkswirtschaftliche Schaden von Decoupling in Deutschland: Szenarien auf Bundes-, Kreis- und Sektorebene," Studien, Stiftung Familienunternehmen / Foundation for Family Businesses, number 273175, June.
    10. Joseph Kopecky, 2024. "A Match Made in Maastricht: Estimating The Treatment Effect of the Euro On Trade," Open Economies Review, Springer, vol. 35(1), pages 159-187, February.
    11. de Lucio, Juan & Mínguez, Raúl & Minondo, Asier & Requena, Francisco, 2024. "The negative impact of disintegration on trade: The case of Brexit," European Economic Review, Elsevier, vol. 163(C).
    12. Yvonne Wolfmayr & Michael Pfaffermayr, 2022. "The EU Services Directive: Untapped Potentials of Trade in Services," WIFO Studies, WIFO, number 69628, Juni.
    13. Borin, Alessandro & Conteduca, Francesco Paolo & Di Stefano, Enrica & Gunnella, Vanessa & Mancini, Michele & Panon, Ludovic, 2023. "Trade decoupling from Russia," International Economics, Elsevier, vol. 175(C), pages 25-44.

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    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation

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