Working Paper: CEPR ID: DP651
Authors: Giuseppe Bertola
Abstract: Economic integration and free factor mobility may be expected to enhance the growth performance of a united Europe. Simple models of integration among independent, endogenously-growing economic entities suggest that factor mobility may deepen rather than reduce regional differences in economic performance, however. This paper studies interactions between static geographical externalities and dynamic investment decisions, and it finds that economic integration need not result in more efficient factor allocations or faster growth.
Keywords: externalities; growth; factor mobility; European Community
JEL Codes: 011; 019
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| economic integration (F15) | growth performance in Europe (O52) |
| free factor mobility (F20) | growth performance in Europe (O52) |
| increased factor mobility (F20) | greater efficiency in high-productivity regions (R11) |
| geographical concentration of production (R32) | slowdown in overall growth (F62) |
| economic integration (F15) | regional disparities (R11) |
| factor mobility (J62) | concentration of production (L23) |
| economic integration (F15) | policy interventions (D78) |