EUROPEAN ECONOMIC INTEGRATION AND COMPARATIVE ADVANTAGES

On the basis of a set of Input-Output tables we computed the European Net Product Possibility Frontier (NPPF) for the years from 1995 to 2011. During this period, several barriers to trade have been removed, allowing higher levels of trade and regional integration. Subsequently, we propose a method to check whether the prediction to be derived from Comparative Advantages (CAs) theory, namely, a specialization pattern that allows to reach the NPPF, is verified. The results suggest that CAs were not exploited well during the period considered and no positive trend emerged. The implication of our results is that there is ample scope for a coordinated policy aimed at improving allocation of resources. Further research on this topic seems to be necessary.