14th journées Louis-André Gérard-Varet

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Norwegian Rhapsody? The Political Economy Benefits of Regional Integration
Luigi Moretti, Nauro Campos, Fabrizio Coricelli

Last modified: 2015-04-30

Abstract


Although most economists expect larger net benefits from economic and political integration than from purely economic integration, this hypothesis remains broadly untested. This paper tries to fill this gap. Our identification strategy rests on the fact that Norway, at the time ofthe 1995 Enlargement of the European Union (EU), had successfully completed accession negotiations, fulfilled all requirements for entry, taken membership in the European Economic Area (with full access to theSingle Market), but decided in a national referendum to reject full-fledged EU membership. Using the differences-in-differences and synthetic controlmethods with regional Scandinavian data, we find substantial politicallydriven economic benefits from EU membership: if Norway had joined the EU in 1995, productivity levels between 1995 and 2001 would have been 6% higher on average.

Keywords


European Union membership, political integration, diff-in-diff synthetic counterfactuals