IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/15078.html
   My bibliography  Save this paper

Choosing Institutional over Economic Integration: Are There Growth Effects?

Author

Listed:
  • Coricelli, Fabrizio
  • Campos, Nauro
  • Moretti, Luigi

Abstract

This paper studies the effects on productivity of integration deepening. Our identification strategy uses the 1995 European Union (EU) enlargement when all four candidate countries joined the European Economic Area (economic integration) but only one (Norway) chose not to join the EU (institutional integration). Using synthetic control methods on sectoral and regional data, we find that had Norway chosen institutional instead of only economic integration in 1995, the average Norwegian region would have experienced a yearly average productivity growth increase of about half a percentage point. We also find these losses are larger for industry than for other sectors.

Suggested Citation

  • Coricelli, Fabrizio & Campos, Nauro & Moretti, Luigi, 2020. "Choosing Institutional over Economic Integration: Are There Growth Effects?," CEPR Discussion Papers 15078, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:15078
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP15078
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Sapir, André, 1997. "Domino Effects in Western European Trade, 1960-92," CEPR Discussion Papers 1576, C.E.P.R. Discussion Papers.
    2. Xuepeng Liu & Emanuel Ornelas, 2014. "Free Trade Agreements and the Consolidation of Democracy," American Economic Journal: Macroeconomics, American Economic Association, vol. 6(2), pages 29-70, April.
    3. Baldwin, Richard & Jaimovich, Dany, 2012. "Are Free Trade Agreements contagious?," Journal of International Economics, Elsevier, vol. 88(1), pages 1-16.
    4. Guido Tabellini, 2010. "Culture and Institutions: Economic Development in the Regions of Europe," Journal of the European Economic Association, European Economic Association, vol. 8(4), pages 677-716, June.
    5. Alberto Abadie & Alexis Diamond & Jens Hainmueller, 2015. "Comparative Politics and the Synthetic Control Method," American Journal of Political Science, John Wiley & Sons, vol. 59(2), pages 495-510, February.
    6. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
    7. Becker, Sascha O. & Egger, Peter H. & von Ehrlich, Maximilian, 2010. "Going NUTS: The effect of EU Structural Funds on regional performance," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 578-590, October.
    8. Andreas Billmeier & Tommaso Nannicini, 2013. "Assessing Economic Liberalization Episodes: A Synthetic Control Approach," The Review of Economics and Statistics, MIT Press, vol. 95(3), pages 983-1001, July.
    9. Edward D. Mansfield & Helen V. Milner & Jon C. Pevehouse, 2008. "Democracy, Veto Players and the Depth of Regional Integration," The World Economy, Wiley Blackwell, vol. 31(1), pages 67-96, January.
    10. Holden, Steinar, 2013. "Avoiding the resource curse the case Norway," Energy Policy, Elsevier, vol. 63(C), pages 870-876.
    11. Guido W. Imbens & Jeffrey M. Wooldridge, 2009. "Recent Developments in the Econometrics of Program Evaluation," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 5-86, March.
    12. Saia, Alessandro, 2017. "Choosing the open sea: The cost to the UK of staying out of the euro," Journal of International Economics, Elsevier, vol. 108(C), pages 82-98.
    13. Acemoglu, Daron & Johnson, Simon & Kermani, Amir & Kwak, James & Mitton, Todd, 2016. "The value of connections in turbulent times: Evidence from the United States," Journal of Financial Economics, Elsevier, vol. 121(2), pages 368-391.
    14. Susan Athey & Guido W. Imbens, 2017. "The State of Applied Econometrics: Causality and Policy Evaluation," Journal of Economic Perspectives, American Economic Association, vol. 31(2), pages 3-32, Spring.
    15. André Sapir, 2011. "European Integration at the Crossroads: A Review Essay on the 50th Anniversary of Bela Balassa's Theory of Economic Integration," Journal of Economic Literature, American Economic Association, vol. 49(4), pages 1200-1229, December.
    16. Wang-Sheng Lee, 2011. "Comparative case studies of the effects of inflation targeting in emerging economies," Oxford Economic Papers, Oxford University Press, vol. 63(2), pages 375-397, April.
    17. Daniel Brou & Michele Ruta, 2011. "Economic Integration, Political Integration Or Both?," Journal of the European Economic Association, European Economic Association, vol. 9(6), pages 1143-1167, December.
    18. Hofmann,Claudia & Osnago,Alberto & Ruta,Michele, 2017. "Horizontal depth : a new database on the content of preferential trade agreements," Policy Research Working Paper Series 7981, The World Bank.
    19. Sapir, Andre, 2001. "Domino effects in Western European regional trade, 1960-1992," European Journal of Political Economy, Elsevier, vol. 17(2), pages 377-388, June.
    20. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Campos, Nauro F. & Coricelli, Fabrizio & Franceschi, Emanuele, 2022. "Institutional integration and productivity growth: Evidence from the 1995 enlargement of the European Union," European Economic Review, Elsevier, vol. 142(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Campos, Nauro F. & Coricelli, Fabrizio & Franceschi, Emanuele, 2022. "Institutional integration and productivity growth: Evidence from the 1995 enlargement of the European Union," European Economic Review, Elsevier, vol. 142(C).
    2. Nauro Campos & Fabrizio Coricelli & Luigi Moretti, 2015. "Norwegian Rhapsody? The Political Economy Benefits of Regional Integration," Working Papers halshs-01267252, HAL.
    3. Campos, Nauro F. & Coricelli, Fabrizio & Moretti, Luigi, 2019. "Institutional integration and economic growth in Europe," Journal of Monetary Economics, Elsevier, vol. 103(C), pages 88-104.
    4. Samuel Verevis & Murat Üngör, 2021. "What has New Zealand gained from The FTA with China?: Two counterfactual analyses†," Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(1), pages 20-50, February.
    5. Bruno Ferman & Cristine Pinto & Vitor Possebom, 2020. "Cherry Picking with Synthetic Controls," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 39(2), pages 510-532, March.
    6. Campos, Nauro F. & Coricelli, Fabrizio & Moretti, Luigi, 2014. "Economic Growth and Political Integration: Estimating the Benefits from Membership in the European Union Using the Synthetic Counterfactuals Method," IZA Discussion Papers 8162, Institute of Labor Economics (IZA).
    7. Giulio Grossi & Marco Mariani & Alessandra Mattei & Patrizia Lattarulo & Ozge Oner, 2020. "Direct and spillover effects of a new tramway line on the commercial vitality of peripheral streets. A synthetic-control approach," Papers 2004.05027, arXiv.org, revised Nov 2023.
    8. David Gilchrist & Thomas Emery & Nuno Garoupa & Rok Spruk, 2023. "Synthetic Control Method: A tool for comparative case studies in economic history," Journal of Economic Surveys, Wiley Blackwell, vol. 37(2), pages 409-445, April.
    9. Coricelli, Fabrizio & Campos, Nauro & Moretti, Luigi, 2014. "Economic Growth and Political Integration: Estimating the Benefits from Membership in the European Union Using the Synthetic Co," CEPR Discussion Papers 9968, C.E.P.R. Discussion Papers.
    10. Echevarría, Cruz A. & Hasancebi, Serhat & García-Enríquez, Javier, 2022. "Economic Effects of Macao’s Integration with Mainland China: A Causal Inference Study," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 37(2), pages 179-215.
    11. Samer Matta & Michael Bleaney & Simon Appleton, 2022. "The economic impact of political instability and mass civil protest," Economics and Politics, Wiley Blackwell, vol. 34(1), pages 253-270, March.
    12. Michael Funke & Kadri Männasoo & Helery Tasane, 2023. "Regional Economic Impacts of the Øresund Cross-Border Fixed Link: Cui Bono?," CESifo Working Paper Series 10557, CESifo.
    13. Nadine McCloud, 2022. "Does domestic investment respond to inflation targeting? A synthetic control investigation," International Economics, CEPII research center, issue 169, pages 98-134.
    14. Kaul, Ashok & Klößner, Stefan & Pfeifer, Gregor & Schieler, Manuel, 2015. "Synthetic Control Methods: Never Use All Pre-Intervention Outcomes Together With Covariates," MPRA Paper 83790, University Library of Munich, Germany.
    15. Nadine McCloud & Ajornie Taylor, 2022. "Does inflation targeting matter for international trade? A synthetic control analysis," Empirical Economics, Springer, vol. 63(5), pages 2427-2478, November.
    16. Daniel Albalate & Germà Bel & Ferran A. Mazaira-Font, 2021. "Decoupling synthetic control methods to ensure stability, accuracy and meaningfulness," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 12(4), pages 549-584, December.
    17. Esteban Colla‐De‐Robertis & Rafael Garduno Rivera, 2021. "The effect of a free trade agreement with the United States on member countries' per capita GDP: A synthetic control analysis," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(4), pages 1129-1145, August.
    18. Manuel Funke & Moritz Schularick & Christoph Trebesch, 2023. "Populist Leaders and the Economy," American Economic Review, American Economic Association, vol. 113(12), pages 3249-3288, December.
    19. Bibek Adhikari & Romain Duval & Bingjie Hu & Prakash Loungani, 2018. "Can Reform Waves Turn the Tide? Some Case Studies using the Synthetic Control Method," Open Economies Review, Springer, vol. 29(4), pages 879-910, September.
    20. Irene Botosaru & Bruno Ferman, 2019. "On the role of covariates in the synthetic control method," The Econometrics Journal, Royal Economic Society, vol. 22(2), pages 117-130.

    More about this item

    Keywords

    Institutional integration; Economic integration; European union;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F15 - International Economics - - Trade - - - Economic Integration
    • F55 - International Economics - - International Relations, National Security, and International Political Economy - - - International Institutional Arrangements
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • O52 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Europe

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:15078. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.