Crespo-Cuaresma, Jesús; Dimitz, Maria Antoinette; Ritzberger-Grunwald, Doris --- "The impact of European integration on growth: what can we learn for EU accession?" [2003] ELECD 9; in Tumpel-Gugerell, Gertrude; Mooslechner, Peter (eds), "Economic Convergence and Divergence in Europe" (Edward Elgar Publishing, 2003)

Book Title: Economic Convergence and Divergence in Europe

Editor(s): Tumpel-Gugerell, Gertrude; Mooslechner, Peter

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781843762416

Section: Chapter 3

Section Title: The impact of European integration on growth: what can we learn for EU accession?

Author(s): Crespo-Cuaresma, Jesús; Dimitz, Maria Antoinette; Ritzberger-Grunwald, Doris

Number of pages: 17

Extract:

3. The impact of European integration
on growth: what can we learn for
EU accession?
Jesús Crespo-Cuaresma, Maria Antoinette
Dimitz and Doris Ritzberger-Grünwald1

3.1. INTRODUCTION

For the last 50 years there has been widespread discussion about the eco-
nomic consequences of European integration. The basic questions are: Is
economic integration growth enhancing? Are the rich getting richer and the
poor getting poorer, or will the income levels of the EC/EU member coun-
tries converge as a consequence of integration? Furthermore, which coun-
tries will profit most from intensified trade among the members?
The theoretical literature on economic growth has gone through several
phases, and the answers to the above questions depend on the specification
of the respective growth model.
From the late 1950s to the mid-1980s the simple Solow­Swan `exogenous
growth model' dominated the literature (Solow 1956). According to the
neoclassical theory, the economy converges towards a steady state due to
diminishing returns to investment in physical capital. Assuming a constant
population, the long-run growth rate is solely determined by the rate of
technological change, which is assumed to be exogenous. As the growth rate
is therefore independent of any economic behaviour, economic policy
changes will only have a temporary effect on economic activity.
The same is true for economic integration. Technological change is con-
sidered a public good common to all countries, so that they all share the
same long-run growth rate determined by technological progress alone.
Therefore the ...