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Interdependent Growth in the EU: The Role of Trade

  • María García-Vega
  • José A. Herce

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 FEDEA in its series Working Papers with number 2002-08.

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Handle: RePEc:fda:fdaddt:2002-08
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  3. Rivera-Batiz, Luis A & Romer, Paul M, 1991. "Economic Integration and Endogenous Growth," The Quarterly Journal of Economics, MIT Press, vol. 106(2), pages 531-55, May.
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  6. Paul Romer, 1989. "Endogenous Technological Change," NBER Working Papers 3210, National Bureau of Economic Research, Inc.
  7. David T. Coe & Elhanan Helpman, 1993. "International R&D Spillovers," NBER Working Papers 4444, National Bureau of Economic Research, Inc.
  8. Mª Luz García de la Vega & José A. Herce, . "Integration and Growth in the EU. The Role of Trade," Working Papers 2000-20, FEDEA.
  9. Miller, Marcus H & Spencer, John E, 1977. "The Static Economic Effects of the UK Joining the EEC: A General Equilibrium Approach," Review of Economic Studies, Wiley Blackwell, vol. 44(1), pages 71-93, February.
  10. Jeffrey A. Frankel & David Romer, 1996. "Trade and Growth: An Empirical Investigation," NBER Working Papers 5476, National Bureau of Economic Research, Inc.
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