Market potential, European Union and growth

The successive enlargements of the European Union have implied an important increase of the market where European firms can Supply their products. In this paper we analyze the influence of this process on the economic growth of EU members by including the market potential as a scale indicator in it Solow-type model. The main results are: first, the integration in the EU, specially for new members, explain a substantial fraction of subsequent growth (between 15% and 40%); second, this effect diminishes over time: third, the GDP of new members appears to have a greater positive influence than its population: and fourth, peripheral countries and those less open to trade are in a worse position to appropriate such benefits. (C) 2009 Society for Policy Modeling. Published by Elsevier Inc. All rights reserved.