DP6820 The Economic Impact of European Integration

Author(s): Andrea Boltho , Barry Eichengreen

Publication Date: May 2008

Keyword(s): European integration , European Union

JEL(s): F0

Programme Areas: International Macroeconomics

Initiatives: Economic History

Link to this Page: www.cepr.org/pubs/dps/DP6820.asp

Economic integration, from the European Payments Union and the European Coal and Steel Community to the Common Market, the European Monetary System, the Single Market, and the euro, is one of the most visible, controversial and commented-upon aspects of Europe’s development since the end of World War II. It is hard to imagine that Europe’s economy would have developed the same way without it. Or is it? We see how far we can push the argument that European living standards, growth rates, and economic structure would have been little different in the absence of the institutions and processes that have culminated in today’s European Union. We adopt the methodology applied by Fogel to the railroads: suspecting that the results are small, wherever possible we adopt assumptions that bias upward the estimated impact. We conclude that European incomes would have been roughly 5 per cent lower today in the absence of the EU.