Abstract
A basic result of new economic geography (NEG) models is that the proximity to consumer markets impacts wages and employment within regions. The ongoing process of European integration, being targeted on the reduction of barriers to trade and factor mobility, has presumably changed relative market access in Europe. The present paper aims to provide some evidence on spatial effects of integration caused by declining border impediments and changing market potentials. The analysis is based on a three-region economic geography model. We focus on the impact of integration on European internal border regions and the question of whether they realise above average integration benefits. The empirical analysis concerns integration effects in the EU15 regions arising from a reduction of non-tariff and other barriers since the mid 1970s.
Highlights
Spatial effects of economic integration have been a central topic of regional science for decades
The results suggest that market access has a positive effect on per capita income and employment density of European regions
The impact of market access on employment seems to increase over time, whereas the corresponding coefficient is more or less unchanged in the equation for Gross Value Added (GVA) per capita
Summary
Spatial effects of economic integration have been a central topic of regional science for decades. Against a background of continuing economic integration in Europe, the issue of spatial integration effects is a timely and highly relevant subject for policy at the national and EU level. In this context, most analyses focus on the question of whether integration involves increasing regional disparities. The EU Commission is concerned about the development of lagging peripheral areas and border regions in the EU. The Commission (2001a, b) notes that regions, especially those along the former external EU border, might be facing very pronounced integration effects because of their proximity to the new member states. In the short run border regions might face significant adjustment pressure due to increased competition in product and labour markets
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