Technology- and investment-led growth effects of economic integration: a panel cointegration analysis for the EU-15 (1960-2000)

Using a panel cointegration approach we test for technology- and investment-led growth effects of economic integration for the EU-15 Member States over the period 1960 to 2000. Integration is measured by an index that is mainly based on tariff reductions and accounts for both GATT-liberalization and European integration. We find that integration has induced sizeable level effects on GDP per capita of some 44%, with both technology-led and investment-led effects playing an important role. While integration-induced efficiency increases materialize within a few years, integration-induced effects on the equilibrium stock of capital require a long time to work themselves out.