The 2016 referendum held in the UK about the possibility to quit EU membership as well as a wave of populistic movements sweeping all over European Countries seem to suggest that less integration could be an outcome for the European Union. This paper has the aim to measure the cost of a missed integration, by highlighting what GDP growth would be in case of a missed integration. It does so by building a scenario of missed integration and compares it with a reference scenario. Scenarios are based on the Macroeconomics, Social, Sectoral, Territorial (MASST) model that has recently been updated to its fourth generation, whereby regional economic relations are tested econometrically. The estimated cause–effect chains are then the basis to build new scenarios simulated under complex sets of internally coherent assumptions in a simulation stage. The reference scenario presented is not a simple extrapolation of past trends; the post-crisis period registered structural changes to be taken into account for the future. In the integration scenario, we assume further integration within the EU to take place through the following changes: (1) higher trade flows among EU countries (“production integration effect”); (2) higher decrease in non-tariffs barriers (“proximity effect to larger markets”); (3) higher trust within and among countries (“social effect”); (4) higher quality of government (“institutional effect”); (5) stronger cooperation networks among cities (“cooperation effect”); and (6) higher exports (“market integration effect”). Results show that a more integrated scenario leads to faster economic growth across all EU countries. Territorial disparities are also initially lower in the case of more integration, although this difference abates over time. Lastly, the gains from integration are not spatially even and some regions gain more than others.

The Cost of Missed EU Integration

Capello, Roberta;Caragliu, Andrea
2021

Abstract

The 2016 referendum held in the UK about the possibility to quit EU membership as well as a wave of populistic movements sweeping all over European Countries seem to suggest that less integration could be an outcome for the European Union. This paper has the aim to measure the cost of a missed integration, by highlighting what GDP growth would be in case of a missed integration. It does so by building a scenario of missed integration and compares it with a reference scenario. Scenarios are based on the Macroeconomics, Social, Sectoral, Territorial (MASST) model that has recently been updated to its fourth generation, whereby regional economic relations are tested econometrically. The estimated cause–effect chains are then the basis to build new scenarios simulated under complex sets of internally coherent assumptions in a simulation stage. The reference scenario presented is not a simple extrapolation of past trends; the post-crisis period registered structural changes to be taken into account for the future. In the integration scenario, we assume further integration within the EU to take place through the following changes: (1) higher trade flows among EU countries (“production integration effect”); (2) higher decrease in non-tariffs barriers (“proximity effect to larger markets”); (3) higher trust within and among countries (“social effect”); (4) higher quality of government (“institutional effect”); (5) stronger cooperation networks among cities (“cooperation effect”); and (6) higher exports (“market integration effect”). Results show that a more integrated scenario leads to faster economic growth across all EU countries. Territorial disparities are also initially lower in the case of more integration, although this difference abates over time. Lastly, the gains from integration are not spatially even and some regions gain more than others.
A Broad View of Regional Science
978-981-33-4097-8
978-981-33-4098-5
Macroeconometric regional growth models
Scenario simulation
Regional growth
Economic Integration
Quantitative foresight
File in questo prodotto:
File Dimensione Formato  
Capello-Caragliu May 2020_final.pdf

accesso aperto

: Post-Print (DRAFT o Author’s Accepted Manuscript-AAM)
Dimensione 2.97 MB
Formato Adobe PDF
2.97 MB Adobe PDF Visualizza/Apri

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11311/1159556
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus ND
  • ???jsp.display-item.citation.isi??? ND
social impact