Europäische Union

European Single Market: The Impact of Deep Trade Integration

Today, the European Union brings together 27 member states and over 450 million people. The original goal to promote the free movement of services, capital, people and goods has been far surpassed. A level of integration has been achieved that promotes common political values and goes far beyond economic issues.

Nevertheless, it is important to precisely assess each individual part of this deep integration.

Julia Spornberger

My dissertation focusses on the effects of the free movement of goods. In particular, I am interested in the causal relationship between the creation of the Single Market and international trade, as well as its accurate and comprehensive quantification. My work so far addresses the following questions: By how much has international trade increased as a result of the creation of the EU Single Market? Where has it decreased? And what is the impact of this deep European trade integration on real income? How reliable are these calculations?

Using the well-known theory of gravity, I seek answers to these questions, as numerous economists have done since the 1960s. In my dissertation, I find that the European Single Market has at least doubled the international trade of its members. For real income, this means a permanent shift of 2-3 percent. Moreover, my results show the importance of measuring the already materialized integration effects. While international trade of longstanding EU members, such as Germany, Austria and Italy, is already highly interwoven, the trade integration of Central and Eastern European (CEE) countries continues to progress. Neglecting the already materialized effects leads to an underestimation of the overall integration effect. Notwithstanding the already deep trade integration, however, there is still considerable integration potential for all EU members. This is being unlocked by the European Commission through new trade policy measures, such as the introduction of a single digital gateway.

 

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