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The gains from economic integration: The EU has still a long way to go

David Comerford, Sevi Rodriguez Mora, (2019), «The gains from economic integration: The EU has still a long way to go», VoxEU.org, 4 Ιανουαρίου

The EU aims to create an integrated economic community where national borders do not impede trade in any way. Recently, Brexit and the populist governments in Italy, Poland and Hungary have challenged this.

Brexit and the rise of populism reflect a wave of anti-globalisation. These challengers are reacting to the view that national economies have become an integrated international economy (Hobolt 2016, Inglehart and Norris 2016, Sampson 2017). In this narrative, Brexit is a reaction to the large (and excessive) degree of integration achieved by the EU. In a recent paper (Comerford and Rodriguez Mora, forthcoming) we present some facts that contradict this narrative – the integration that exists within EU countries is much greater than the integration between them.

We look at the trade flows between most developed countries, including those of the EU, and measure the frictions between pairs of countries as the parameters in a standard modern trade model to explain the observed flows. In doing so, we condition on sizes, distance and common language.

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