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A Broad View of Regional ScienceThe Cost of Missed EU Integration

A Broad View of Regional Science: The Cost of Missed EU Integration [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.] http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png

A Broad View of Regional ScienceThe Cost of Missed EU Integration

Part of the New Frontiers in Regional Science: Asian Perspectives Book Series (volume 47)
Editors: Suzuki, Soushi; Patuelli, Roberto
Capello, Roberta; Caragliu, Andrea
A Broad View of Regional Science — Jan 20, 2021
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21 pages

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Publisher
Springer Singapore
Copyright
© Springer Nature Singapore Pte Ltd. 2021
ISBN
978-981-33-4097-8
Pages
3 –24
DOI
10.1007/978-981-33-4098-5_1
Publisher site
See Chapter on Publisher Site

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.]

Published: Jan 20, 2021

Keywords: Macroeconometric regional growth models; Scenario simulation; Regional growth; Economic Integration; Quantitative foresight; R11; R12

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