Empirical evidence on the determinants of economic growth in the European Union : what effects of integration?

Abstract

The European Union is recently suffering from problems of persistently low growth as well as anti-EU and populistic movements that capitalise from the economic discontent. This paper, thus, checks for the impact of the European integration on the economic growth in the EU countries, controlling for other determinants, and differencing also between the old and new member states. First, the integration index and its sub-indices for trade in goods, trade in services, FDI, portfolio, and migration are estimated using the principal components analysis to illustrate the state of integration in the European Union and its member states. Next, we use the estimated index and sub-indices in the growth regressions to analyse their impact on growth in GDP per capita in the EU countries.