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EU Expansion and EU Growth

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Author Info

  • Alan V. Deardorff

    (University of Michigan)

  • Robert M. Stern

    (University of Michigan)

Abstract

Almost from its inception as the European Economic Community, the European Union has excited the hope if not the expectation that it would generate dynamic gains from trade, including perhaps a permanent increase in the rates of growth of participating countries. This paper examines the empirical evidence relating to this issue and then interprets the economic performance of the EU countries in terms of a simple theoretical model of economic integration with increasing returns to scale. The paper concludes that evidence for increased long-run growth rates of the EU countries is weak, and that what may have happened instead is that countries have benefited asymmetrically from the formation and the later expansion of the EU. Benefits of economic integration appear to accrue - in the form of temporarily higher growth rates leading to higher levels of per capita income - first to large countries and then to some smaller countries that entered the arrangement relatively early.

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File URL: http://fordschool.umich.edu/rsie/workingpapers/Papers476-500/r487.pdf
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Bibliographic Info

Paper provided by Research Seminar in International Economics, University of Michigan in its series Working Papers with number 487.

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Length: 48 Pages
Date of creation: 2002
Date of revision:
Handle: RePEc:mie:wpaper:487

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Postal: ANN ARBOR MICHIGAN 48109
Web page: http://www.fordschool.umich.edu/rsie/
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Related research

Keywords: European integration; Trade and growth;

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References

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  1. Diego Puga & Anthony J. Venables, 1995. "Preferential Trading Arrangements and Industrial Location," CEP Discussion Papers dp0267, Centre for Economic Performance, LSE.
  2. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
  3. Magnus Henrekson & Johan Torstensson & Rasha Torstensson,, . "Growth Effects of European Integration," Discussion Papers 96/1, University of Nottingham, CREDIT.
  4. Ethier, Wilfred J, 1982. "Decreasing Costs in International Trade and Frank Graham's Argument for Protection," Econometrica, Econometric Society, vol. 50(5), pages 1243-68, September.
  5. Pravin Krishna, . "Regionalism and Multilaterialism: A Political Economy Approach," Working Papers 96-5, Brown University, Department of Economics.
  6. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  7. Richard Baldwin, 1993. "A Domino Theory of Regionalism," NBER Working Papers 4465, National Bureau of Economic Research, Inc.
  8. Jean Pisani-Ferry & Alexander Italianer, 1994. "Whither the Gains from European Economic Integration ?," Revue économique, Presses de Sciences-Po, vol. 0(3), pages 689-702.
  9. Keller, Wolfgang, 1998. "Are international R&D spillovers trade-related?: Analyzing spillovers among randomly matched trade partners," European Economic Review, Elsevier, vol. 42(8), pages 1469-1481, September.
  10. Ethier, Wilfred, 1979. "Internationally decreasing costs and world trade," Journal of International Economics, Elsevier, vol. 9(1), pages 1-24, February.
  11. David H. Romer & Jeffrey A. Frankel, 1999. "Does Trade Cause Growth?," American Economic Review, American Economic Association, vol. 89(3), pages 379-399, June.
  12. Vanhoudt, Patrick, 1998. "Did the European Unification Induce Economic Growth? In Search of Scale-Effects and Persistent Changes," Working Paper Series in Economics and Finance 270, Stockholm School of Economics.
  13. Baldwin, Richard & Seghezza, Elena, 1996. "Growth and European Integration: Towards an Empirical Assessment," CEPR Discussion Papers 1393, C.E.P.R. Discussion Papers.
  14. Johansson, Helena, 2001. "Regional Integration and Productivity Growth: The Case of EU," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 16, pages 1-20.
  15. Athanasios Vamvakidis, 1999. "Regional Trade Agreements or Broad Liberalization: Which Path Leads to Faster Growth?," IMF Staff Papers, Palgrave Macmillan, vol. 46(1), pages 3.
  16. Levy, Philip I, 1997. "A Political-Economic Analysis of Free-Trade Agreements," American Economic Review, American Economic Association, vol. 87(4), pages 506-19, September.
  17. Ben-David, Dan, 1993. "Equalizing Exchange: Trade Liberalization and Income Convergence," The Quarterly Journal of Economics, MIT Press, vol. 108(3), pages 653-79, August.
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Citations

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Cited by:
  1. Lee, Hiro & van der Mensbrugghe, Dominique, 2004. "EU enlargement and its impacts on East Asia," Journal of Asian Economics, Elsevier, vol. 14(6), pages 843-860, January.
  2. Wilhelm Kohler, 2006. "The “Lisbon Goal” of the EU: Rhetoric or Substance?," Journal of Industry, Competition and Trade, Springer, vol. 6(2), pages 85-113, June.

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