Broadly speaking, European integration affects growth by stimulating the accumulation of physical capital and/or knowledge capital (i.e. technology). In Discussion Paper No. 1393, Research Fellow Richard Baldwin and Elena Seghezza survey existing empirical work on integration and growth, concluding that there is strong evidence that trade liberalization promotes growth by boosting investment in physical capital. Because European integration has substantially liberalized European trade, they conclude that it has promoted European growth.

They find much less econometric support for integration-induced technology-led growth. Nonetheless cross-country data reveals a rough correlation between the national total factor productivity growth rates and the degree (and duration) of European integration. Their exploratory regressions into this phenomenon prove inconclusive, but the authors suggest several directions for future research.

Growth and European Integration: Towards an Empirical Assessment
Richard E Baldwin and Elena Seghezza