Regional Integration and Growth in Developing Nations

Regional Integration and Growth in Developing Nations

This paper explores the growth implications of regional integration. From the theory, it identifies the footprints that such growth should leave in the data. It then checks the data on the four poor EU nations for such footprints. Prima facie evidence for Ireland, Portugal and Spain support the notion that EU membership induced investment-led growth, but Greek data reject it. This suggests that the integration of relatively poor nations into a rich trading bloc favoured the poor nation`s investment rates, however this was not strong enough to overcome poor macroeconomic management and market rigidities (which were features of the Greek case). (JEL Classification: F43, O4, F15)