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Interdependent Growth in the EU: The Role of Trade

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  • María Garcia-Vega

    (Universidad Complutense de Madrid, Spain)

  • José A. Herce

    (FEDEA, Fundación de Estudios de Economía Aplicada)

Abstract

After properly modelling growth externalities and using spatial econometric techniques we investigate whether economic integration promotes interdependent growth among countries. We conclude that this has been indeed the case for advanced OECD countries and that, for those countries belonging to the EU, through successive enlargements, the effect has been even stronger. More precisely, if every (trade) partner of a given country experiences an extra growth of 1 percentage point, this economy will profit from an extra 0.5 point, and if this country belongs to the EU it will have an additional increase of its rate of growth of 0.2 points. Both figures can be interpreted as growth externalities with the latter suggesting that an integration process like the one followed by the EU has an (positive) effect on growth.

Suggested Citation

  • María Garcia-Vega & José A. Herce, 2002. "Interdependent Growth in the EU: The Role of Trade," Economics Working Papers 011, European Network of Economic Policy Research Institutes.
    • Handle: RePEc:epr:enepwp:011
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    References listed on IDEAS

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    Cited by:

    1. Getachew, Asgedom Tessema & Tadele, Ferede & Arega, Hailu & Fantu, Guta, 2005. "The Impact of Regional Economic Cooperation on the Ethiopian Manufacturing Sector: the Case of Common Market for Southern and Eastern Free Trade Area (COMESA-FTA)," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 10(1), pages 1-98, May.
    2. Tomasz Brodzicki, 2005. "New empirical insights into the growth effects of economic integration within EU," International Trade 0505014, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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