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The Leverage of the Small Ones in the EU

  • Fritz Breuss

    (WIFO)

In the early 1970s, E.F. Schumacher criticised western industrial countries in the face of emerging globalisation by using a term generated by Leopold Kohr: "Small is beautiful." Seen against the progressing enlargement of the EU we need to ask whether and to what extent small is still beautiful. The internal market promises the greatest integration benefits from utilising economies of scale. In line with the integration theory, large economies (and their large-scale businesses) should profit more from a deeper European integration than would smaller ones. But is the size of an economy within the EU really of importance? While the original EU 6 was made up of equally sized countries, today's EU 28 is highly unequal: seven large and medium-sized countries face 21 small ones. While politics is still dominated by the major countries (including in the Council), especially along the historical Berlin-Paris axis, the situation is mixed when we look at the economic side, corresponding widely to Rose's (2006) estimate in searching for a "national scale effect". The adage that size does not matter applies to the EU countries as well. Smaller economies are more open to foreign trade than large ones (and should thus profit more from free access to the internal market), but otherwise do not differ in a systematic manner. Size does not make them rich. Their growth performance does not depend on a country's size, but rather on the period of investigation and the phase of integration.

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Paper provided by WIFO in its series WIFO Working Papers with number 452.

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Length: 51 pages
Date of creation: 08 Aug 2013
Date of revision:
Handle: RePEc:wfo:wpaper:y:2013:i:452
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