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The scale of internal market and the growth effects of regional economic integration. The case of the EU

Listed author(s):
  • Tomasz Brodzicki

    ()

    (Department of Economics, University of Gdansk)

The recent enlargement of the European Union has led to a relatively significant increase in the size of the internal market. This has once again shifted attention to the issue whether the anticipated positive growth effects of economic integration are related to the scale of the integrated market. In the present study we utilize several empirical approaches to assess whether increases in the scale of the internal market mainly due two a series of enlargements had a positive, distinguishable and statistically significant impact on the real GDP per capita growth rates of the EU Member States. The study is undertaken for a panel of 27 states (EU15 and twelve countries of the reference group) within a considerable period of 40 years (1960-1999). In contrast to the previous research the current study utilizes indices of relative scale of the integrating block in comparison to traditionally utilized absolute scale indices. The empirical evidence seems to confirm the initial hypothesis. Increases of relative scale of the regional economic block in comparison to the size of domestic economies mainly due to consecutive enlargements seem to provide significant incentives and are beneficial to the growth-performance of the Member States. The incentives are obviously higher for smaller-scale economies. On the policy arena the deepening of the integration process seems to enhance the benefits associated with integration widening.

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File URL: http://gnu.univ.gda.pl/~keie/ao7.doc
File Function: First version, 2006
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Paper provided by The Univeristy of Gdansk, Faculty of Economics, Economics of European Integration Division in its series Working Papers of Economics of European Integration Division with number 0601.

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Length: 18 pages
Date of creation: Aug 2006
Handle: RePEc:gda:wpaper:0601
Contact details of provider: Postal:
Univeristy of Gdansk, Faculty of Economics, ul. Armii Krajowej 119/121, 81-824 Sopot, Poland

Phone: (048) 58 523-13-70
Fax: (048) 58 523-13-70
Web page: http://ekonom.ug.edu.pl/web/keie/index.html?lang=pl

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  1. Baldwin, Richard E, 1992. "Measurable Dynamic Gains from Trade," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 162-174, February.
  2. Willenbockel, Dirk, 1998. "Growth effects of anticipated trade liberalization and the Baldwin multiplier," Economics Letters, Elsevier, vol. 59(2), pages 231-235, May.
  3. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
  4. Patrick Vanhoudt, 1999. "Did the European unification induce economic growth? In search of scale effects and persistent changes," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 135(2), pages 193-220, June.
  5. Alexander Italianer & Jean Pisani-Ferry, 1994. "Whither the Gains from European Economic Integration ?," Revue Économique, Programme National Persée, vol. 45(3), pages 689-702.
  6. Baldwin, Richard, 1993. "A Domino Theory of Regionalism," CEPR Discussion Papers 857, C.E.P.R. Discussion Papers.
  7. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
  8. Barro, Robert J & Lee, Jong-Wha, 2001. "International Data on Educational Attainment: Updates and Implications," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 541-563, July.
  9. Michael B. Devereux & Beverly J. Lapham, 1994. "The Stability of Economic Integration and Endogenous Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 109(1), pages 299-305.
  10. Luis Rivera-Batiz & Paul M. Romer, 1994. "Economic Integration and Endogenous Growth: An Addendum," The Quarterly Journal of Economics, Oxford University Press, vol. 109(1), pages 307-308.
  11. Mazumdar, Joy, 1996. "Do Static Gains from Trade Lead to Medium-Run Growth?," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1328-1337, December.
  12. Baldwin, Richard E & Forslid, Rikard, 2000. "The Core-Periphery Model and Endogenous Growth: Stabilizing and Destabilizing Integration," Economica, London School of Economics and Political Science, vol. 67(267), pages 307-324, August.
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