Growth Effects of Economic Integration: Evidence from the EU Member States

Abstract

After compiling an index of economic integration that accounts for global (GATT) as well as regional (European) integration of the EU member states we test for permanent and temporary growth effects in a growth accounting framework, using a panel of fifteen EU member states over the period 1950-2000. While the hypothesis of permanent growth effects is rejected, the results--though not completely robust to controlling for time-specific effects--suggest sizeable level effects: GDP per capita of the EU would be approximately one-fifth lower today if no integration had taken place since 1950. [PUBLICATION ABSTRACT]