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Market trends

Psst Britain…EU membership generates growth bonus

By on 9 December 2016

15 years of EU membership boosts the economic growth of a country, significantly more than non-EU members experience during the same period. Moreover, EU membership appears to enable poorer countries to catch up with wealthier ones.

This is one of the conclusions of the scientific report “Growth effects of EU and EZ memberships: Empirical findings from the first 15 years of the Euro, published at the end of October 2016 in the Journal of Economic Modelling. Driving forces behind the spurred growth are the scale effects of economic integration, which positively impacts technological progress. Especially countries with a high degree of foreign trade benefit.

Eurozone membership

However, researchers Johannes Dreyer and Peter Alfons Schmid not only investigated whether economic integration realized by EU memberships led to growth bonuses for its members. They also analysed the economic benefits of being a Eurozone member state.

The researchers observe that eurozone membership hindered economic growth during the crisis years, compared to EU members that were not. In other years eurozone membership did not impact growth at all, positive or negative.

Moreover, investment share seems to have a positive relation to growth, whilst past inflation and government spending both have a negative impact.

Data set

For this analysis the researchers used Eurostat data from 1995 till 2013 on 31 European countries as input. From the data set they extracted average GDP data in purchasing power terms, annual average of inflation rate data and average shares of imports and exports as percentage of GDP.

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Bas van Essen
Frankfurt

Savingsmonitor is a news blog reporting about savings behavior and statistics across whole the European Union. Bas van Essen is responsible for the content. Bas is a former business reporter, who covered the Dutch startup scene, the job market and personal finance. Bas served the Dutch Financial Times ('Financieele Dagblad'), the Dutch 'Financiële Telegraaf', Sprout.nl, Intermediair.nl and IDG. He followed a Master Communication Science and MBA Big Data & Business Analytics at the University of Amsterdam.