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Implicit Regulatory Barriers in the EU Single Market: New Empirical Evidence from Gravity Models

Author

Listed:
  • Jean-Marc Fournier

    (OECD)

  • Aurore Domps

    (ENSAE-ParisTech)

  • Yaëlle Gorin

    (ENSAE-ParisTech)

  • Xavier Guillet

    (ENSAE-ParisTech)

  • Délia Morchoisne

    (ENSAE-ParisTech)

Abstract

Gravity models are used to explore the determinants of trade, making use of fixed effect linear estimators and a Poisson estimator (as in Santos Silva and Tenreyro, 2006) with fixed effects. Beyond usual determinants of trade such as GDP, distance, contiguity, free trade areas and language, this analysis mainly focuses on the role of product market regulation stringency and heterogeneity, and on the role of employment protection. The Single Market has a large positive impact on trade. A broad reform package that would align Product Market Regulation (PMR) indicators to the average of the top half of the best performers and would cut regulatory heterogeneity by one fifth could increase trade intensity within the EU by more than 10%. This analysis also makes use of subcomponents of the PMR indicator (by field of regulation) and the OECD Energy, Transport and Communications Regulation (ETCR) indicator (by sector) to focus on elements on the regulatory issues that matter most for trade. In particular, the stringency of airline and telecom regulations has an adverse effect on trade intensity. Empirical findings on the impact of employment protection legislation on trade intensity are somewhat mixed. This Working Paper relates to the 2014 OECD Economic Survey of the European Union (www.oecd.org/eco/surveys/economic-survey-european-union.htm). Barrières réglementaires implicites dans le marché unique de l'UE : Nouveaux résultats de modèles de gravité Les modèles de gravité sont utilisés pour explorer les déterminants du commerce, avec des estimateurs linéaires avec effets fixes et un estimateur de Poisson (comme dans Santos Silva et Tenreyro, 2006) avec des effets fixes. Au-delà des déterminants habituels du commerce tels que le PIB, la distance, la contiguïté, les zones de libre-échange et la langue, cette analyse se concentre principalement sur le rôle de la réglementation des marchés de produits et de son hétérogénéité, et sur le rôle de la protection de l'emploi. Le marché unique a un impact positif important sur le commerce. Un ensemble large de réformes qui alignerait les indicateurs de réglementation des marchés de produits (RMP) à la moyenne de la moitié des pays les plus performants et qui réduirait l'hétérogénéité des réglementations par un cinquième pourrait augmenter l'intensité des échanges au sein de l'UE de plus de 10%. Cette analyse utilise également des sous-composantes de l’indicateur RMP (par domaines de réglementation) et de l’indicateur OCDE de la réglementation dans les secteurs de l'énergie, des transports et des communications (ETCR) (par secteur) pour se concentrer sur les éléments de réglementation qui comptent le plus pour le commerce. En particulier, la rigueur de la réglementation aérienne et des télécommunications a un effet négatif sur l'intensité des échanges. Les résultats empiriques sur l'impact de la législation de protection de l'emploi sur l'intensité des échanges sont quelque peu mitigés. Ce Document de travail a trait à l’Étude économique de l’OCDE de l’Union européenne, 2014 (www.oecd.org/fr/eco/etudes/etude-economique-union-europeenne.htm).

Suggested Citation

  • Jean-Marc Fournier & Aurore Domps & Yaëlle Gorin & Xavier Guillet & Délia Morchoisne, 2015. "Implicit Regulatory Barriers in the EU Single Market: New Empirical Evidence from Gravity Models," OECD Economics Department Working Papers 1181, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:1181-en
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    File URL: https://doi.org/10.1787/5js7xj0xckf6-en
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    Citations

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    Cited by:

    1. Jan Stráský, 2016. "Priorities for completing the European Union's Single Market," OECD Economics Department Working Papers 1315, OECD Publishing.
    2. Ansgar Belke & Irina Dubova & Thomas Osowski, 2018. "Policy uncertainty and international financial markets: the case of Brexit," Applied Economics, Taylor & Francis Journals, vol. 50(34-35), pages 3752-3770, July.
    3. David Haugh & Alexandre Kopoin & Elena Rusticelli & David Turner & Richard Dutu, 2016. "Cardiac Arrest or Dizzy Spell: Why is World Trade So Weak and What can Policy Do About It?," OECD Economic Policy Papers 18, OECD Publishing.
    4. International Monetary Fund, 2016. "United Kingdom; Selected Issues," IMF Staff Country Reports 16/169, International Monetary Fund.
    5. Stefano Micossi, 2016. "30 Years of the Single European Market," Bruges European Economic Policy Briefings 41, European Economic Studies Department, College of Europe.
    6. Ken Coutts & Graham Gudgin & Jordan Buchanan, 2018. "How the Economics Profession Got It Wrong on Brexit," Working Papers wp493, Centre for Business Research, University of Cambridge.
    7. Jean-Marc Fournier, 2015. "The negative effect of regulatory divergence on foreign direct investment," OECD Economics Department Working Papers 1268, OECD Publishing.
    8. Christine de la Maisonneuve, 2016. "How to boost export performance in Greece," OECD Economics Department Working Papers 1299, OECD Publishing.
    9. Matteo Fiorini & Bernard Hoekman, 2017. "Economic Governance, Regulation and Services Trade Liberalization," RSCAS Working Papers 2017/27, European University Institute.
    10. repec:gam:jijfss:v:6:y:2018:i:2:p:46-:d:143042 is not listed on IDEAS
    11. Rafal Kierzenkowski & Nigel Pain & Elena Rusticelli & Sanne Zwart, 2016. "The Economic Consequences of Brexit: A Taxing Decision," OECD Economic Policy Papers 16, OECD Publishing.
    12. Micossi, Stefano, 2016. "Thirty Years of the Single European Market," CEPS Papers 11919, Centre for European Policy Studies.
    13. Graham Gudgin & Ken Coutts & Neil Gibson & Jordan Buchanan, 2017. "The Role of Gravity Models in Estimating the Economic Impact of Brexit," Working Papers wp490, Centre for Business Research, University of Cambridge.
    14. Paul J.J. Welfens, 2015. "Transatlantisches Freihandelsabkommen EU-USA: Befunde zu den TTIP-Vorteilen und Anmerkungen zur TTIP-Debatte," EIIW Discussion paper disbei209, Universitätsbibliothek Wuppertal, University Library.

    More about this item

    Keywords

    commerce; EU single market; gravity model; marché unique de l’UE; modèle de gravité; product market regulation; réglementation des marchés de produits; trade;

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • K20 - Law and Economics - - Regulation and Business Law - - - General

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