EU Accession and Income Growth

An Empirical Approach

(Arjan Marcel) Lejour, Vladimir Solanic, (Paul Johannes George) Tang

Research output: Working paperDiscussion paperOther research output

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Abstract

To gauge the dynamic effects, we follow a two-step procedure in which a gravity equation for bilateral trade shows the trade effect of EU membership and a growth regression yields the income effect of trade. Shared EU membership is found to increase trade between two of its member states with about 34%. EU membership may contribute to trade by inducing countries to improve the quality of their institutions.

Trade increases by another 22% if institutions improve, yielding a total trade increase of 56%. Improved openness increases income by 37.5% according to our estimates. Adding a small direct effect of improved institutions on income, the total income effect of EU membership is 39% for the ten new members. This implies that EU membership, or its effect on trade and institutions, could lead to large economic gains for the new member states, but does not bring them economically on par with the old member states.
Original languageEnglish
Place of PublicationThe Hague
PublisherCPB
Number of pages41
ISBN (Print)9058332969, 9789058332967
Publication statusPublished - Oct 2006

Publication series

NameCPB discussion paper
Volumeno. 72

Fingerprint

EU accession
Income growth
Income
Income effect
Gravity equation
Trade shows
Growth regressions
Dynamic effects
New member states
Economics
Direct effect
Bilateral trade
Openness
Quality of institutions

Keywords

  • National income
  • EU-landen
  • Europe
  • Income
  • European Union countries
  • Commerce
  • Inkomensverdeling
  • Convergentie (economie)
  • Toetredingen

Cite this

Lejour, A. M., Solanic, V., & Tang, P. J. G. (2006). EU Accession and Income Growth: An Empirical Approach. (CPB discussion paper; Vol. no. 72). The Hague: CPB.
Lejour, (Arjan Marcel) ; Solanic, Vladimir ; Tang, (Paul Johannes George). / EU Accession and Income Growth : An Empirical Approach. The Hague : CPB, 2006. (CPB discussion paper).
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Lejour, AM, Solanic, V & Tang, PJG 2006 'EU Accession and Income Growth: An Empirical Approach' CPB discussion paper, vol. no. 72, CPB, The Hague.

EU Accession and Income Growth : An Empirical Approach. / Lejour, (Arjan Marcel); Solanic, Vladimir; Tang, (Paul Johannes George).

The Hague : CPB, 2006. (CPB discussion paper; Vol. no. 72).

Research output: Working paperDiscussion paperOther research output

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T1 - EU Accession and Income Growth

T2 - An Empirical Approach

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AU - Tang, (Paul Johannes George)

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AB - To gauge the dynamic effects, we follow a two-step procedure in which a gravity equation for bilateral trade shows the trade effect of EU membership and a growth regression yields the income effect of trade. Shared EU membership is found to increase trade between two of its member states with about 34%. EU membership may contribute to trade by inducing countries to improve the quality of their institutions.Trade increases by another 22% if institutions improve, yielding a total trade increase of 56%. Improved openness increases income by 37.5% according to our estimates. Adding a small direct effect of improved institutions on income, the total income effect of EU membership is 39% for the ten new members. This implies that EU membership, or its effect on trade and institutions, could lead to large economic gains for the new member states, but does not bring them economically on par with the old member states.

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KW - EU-landen

KW - Europe

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KW - Commerce

KW - Inkomensverdeling

KW - Convergentie (economie)

KW - Toetredingen

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SN - 9058332969

SN - 9789058332967

T3 - CPB discussion paper

BT - EU Accession and Income Growth

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Lejour AM, Solanic V, Tang PJG. EU Accession and Income Growth: An Empirical Approach. The Hague: CPB. 2006 Oct. (CPB discussion paper).