The Positive Border Effect of EU Integration

30 Pages Posted: 8 Feb 2011

See all articles by Steven Brakman

Steven Brakman

University of Groningen - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Harry Garretsen

Utrecht University - School of Economics; CESifo (Center for Economic Studies and Ifo Institute); Radboud University Nijmegen - Department of Economics

Charles van Marrewijk

Utrecht University - School of Economics

Abdella Oumer

University of Groningen - Faculty of Economics and Business

Date Written: January 31, 2011

Abstract

Distance related variables typically vary in a cross-section dimension but less so in a time dimension across cities, regions, or countries. The enlargement of the EU or the introduction of the euro, however, can be looked upon as integration shocks that are informative of the consequences of changes in distance over time. Border cities or regions are thought to be more affected by these shocks than more central locations because of the larger impact of changes in the transaction costs that go along with EU integration along the border. Both at the urban and regional level, we find a beneficial influence of the EU integration process as measured by the growth in population share along the integration borders, leading to an extra growth rate of about '315 percentage points per annum. The positive integration holds on both sides of the integration border, is active for a limited distance (up to 70km) and time period (up to 30 years), and is particularly important for large cities and regions. Despite the positive EU integration effect, being located along a border remains a burden in view of the (larger) negative general border effect. We do not find similar positive border-integration effects as a result of the introduction of the euro.

JEL Classification: F15, R12, R23

Suggested Citation

Brakman, Steven and Garretsen, Harry and van Marrewijk, Charles and Oumer, Abdella, The Positive Border Effect of EU Integration (January 31, 2011). CESifo Working Paper Series No. 3335. Available at SSRN: https://ssrn.com/abstract=1756679

Steven Brakman (Contact Author)

University of Groningen - Department of Economics ( email )

P.O. Box 800
9700 AV Groningen
Netherlands
+31 50 363 3746 (Phone)
+31 50 363 3730 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Harry Garretsen

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands
+31 0 30 253 9810 (Phone)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.cesifo.de

Radboud University Nijmegen - Department of Economics ( email )

Nijmegen, 6500 HK
Netherlands
+31 24 361 5889 (Phone)
+31 24 361 1846 (Fax)

Charles Van Marrewijk

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands
*31-(0)30-2539810 (Phone)

HOME PAGE: http://www.charlesvanmarrewijk.nl

Abdella Oumer

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
9700 AB Groningen
Netherlands

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