DP1465 Growth Effects of European Integration

Author(s): Magnus Henrekson, Rasha Torstensson
Publication Date: September 1996
Keyword(s): Economic Growth, European Integration, Long-run Growth, Regional Integration
JEL(s): F15, F43
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=1465

This paper deals with the effects of European integration in the EC and EFTA on economic growth. Base regressions suggest that EC and EFTA memberships do in fact have a positive and significant effect on economic growth, and that there is no significant difference between EC and EFTA membership. This result is not completely robust with respect to changes in the set of control variables and to measurement errors. Nonetheless, the results suggest that regional integration may not only affect resource allocation, but also long-run growth rates. This conclusion is strengthened by the fact that we obtain similar results when we use panel data for a sample of OECD countries. In addition, we explore possible indirect effects of regional integration.