EU economic benefit questioned
By DeJphine Strauss in London
The economic benefits of European integration may have been more modest than claimed by its more fervent proponents, according to an eminent economist who questions how far liberalisation depended on the political process.
European incomes would have been about 5 per cent lower if the European Union did not exist, Barry Eichengreen, professor at the University of California, Berkeley concludes in a paper co-authored by Andrea Boltho at Oxford University.
That suggests European union has led to significant gain in living standards but it is considerably less than one recent estimate that per capita output would be a fifth lower if there had been no union since 1950.
"Integration has clearly not been a pariacea for the continent's economic ills, as claimed by some if its proponents. But it has bestowed some benefits," the researchers argue.
The findings are based on the hypothesis that "economic forces would almost certainly have pushed for freer trade, stable exchange rates and less regulation in Europe" even without creating the institutions that led to today's EU.
For example, Prof Eichengreen argues that the surge in intra-European trade in the 1960s was helped by rapid economic growth, as well a&,jfe common market dismantpig trade barriers.
Likewise, reforms in the US and UK could have prompted European governments to pursue the liberalisations they made in the 1980s even without the EU single market programme.
Yet the paper argues the commitment to integration required by the common market and then EU helped politicians override fears about reform and allow further liberalisation.
"Often 'Europe' was used as a shield against domestic opposition to deregulation," the research notes, adding that it would have been difficult to imagine governments opening public procurement to foreign businesses, or recognising other members' domestic standards and regulations, in the absence of the single market.
The authors judge that the dismantling of trade barriers under the common market gave the greatest gains, adding about 5 per cent to the gross domestic product of the six original member states - offset by losses due to the protectionist common agricultural policy.
However, the paper finds the overall impact of monetary union, Europe's most ambitious project, to be only "mildly positive" so far and notes that it. may have allowect Italy to postpone much-needed reforms.
P.S. de Pancho "El Villan":
