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Interdependent Growth in the EU: The Role of Trade

  • María Garcia-Vega

    ()

    (Universidad Complutense de Madrid, Spain)

  • José A. Herce

    ()

    (FEDEA, Fundación de Estudios de Economía Aplicada)

After properly modelling growth externalities and using spatial econometric techniques we investigate whether economic integration promotes interdependent growth among countries. We conclude that this has been indeed the case for advanced OECD countries and that, for those countries belonging to the EU, through successive enlargements, the effect has been even stronger. More precisely, if every (trade) partner of a given country experiences an extra growth of 1 percentage point, this economy will profit from an extra 0.5 point, and if this country belongs to the EU it will have an additional increase of its rate of growth of 0.2 points. Both figures can be interpreted as growth externalities with the latter suggesting that an integration process like the one followed by the EU has an (positive) effect on growth.

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Paper provided by European Network of Economic Policy Research Institutes in its series Economics Working Papers with number 011.

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Length: 16 pages
Date of creation: Sep 2002
Date of revision:
Handle: RePEc:epr:enepwp:011
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