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Economic integration and growth at the margin: A space-time incremental impact analysis

Timo Mitze () and Philipp Breidenbach ()

No 775, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: We use the case of EU enlargement in 2004 to investigate the impact of economic integration on regional income growth. Being particularly interested in studying the effects 'at the margin', we track the relative performance of regions adjacent to both sides of the integration border vis-à-vis non-border regions. We use a space-time incremental difference-in-difference (IDiD) analysis to account for spatial spillovers, early anticipation and adjustment dynamics over time. Our findings indicate that EU-15 regions up to a distance of 100 km from the integration border experience positive integration effects, but we do not observe additional income growth effects for NMS-10 border regions compared to non-border regions. The results are found to be robust for alternative regression specifications including doubly robust estimation, varying sample settings and placebo tests. Country-specific estimates for the EU-15 finally indicate that in particular East German regions have benefited from EU enlargement potentially reflecting their proximity to Poland as largest NMS market, their favorable investment conditions, i.e. modern infrastructure, and preferential historical ties to the NMS-10.

Keywords: economic integration; regional income growth; EU enlargement; spatial spillovers; space-time incremental difference-in-difference estimation (search for similar items in EconPapers)
JEL-codes: C23 F15 O47 R11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eur, nep-geo, nep-int and nep-ure
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:775

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