Impact of European Integration on Institutional Development

Abstract

This paper investigates institutional development induced by European integration. We estimate a dynamic panel data model wherein institutional development is measured as positive changes in the Worldwide Governance Indicators, which are explained by the status of the European countries, for example, being a member of the euro area or an EU member state or a candidate country of the European Union, and additional controls. We confirm a positive effect arising from prospective EU membership, although being an EU member state does not influence the institutional development path. For members of the euro area, there is robust evidence for institutional deterioration in one particular area, namely control of corruption. JEL Classifications: F55, O43

Financial system, trade concentration and economic growth in West African Monetary Zone (WAMZ)

“…The different in variables may leads to the models showing positive relationship of their work in the long run. On the institutional quality, our results differed from Schonfelder & Wagner (2015). They positioned that strong institutional development granger cause growth within the Europeans economies, whereas in the African environment (economic regions) the reverse holds in our findings.…”

“…Many literatures have pinpointed to the development of financial integration, sound financial institutions, markets and market infrastructure interconnectivity are some of the medium through which economic integration can impact growth. These literatures have also identified direct or indirect ways that economic blocs affect trade, financial institution, standard of livings and productivity growth within the economies in the blocs, (Lopez-Cordova & Moreira, 2003;Kamau, 2010;Bertola, 2010;Cornia, 2011;Gao, 2011;Eichengreen, 2012;Gehringer, 2013;Conti, 2014;Geda & Kebret, 2014;Schonfelder & Wagner 2015;Janus & Riera-Crichton, 2015;Konig, 2015;Mann, 2015;Anyanwu, 2015;Busemeyer & Tober, 2015;Mevel et al, 2016;Roy & Mathur, 2016;Kalaitzoglou & Durgheu, 2016;Soete and Hove, 2017;Baier et al, 2017;Jooji & Oguchi 2017;ECB, 2017;Klofat, 2017;Ehigiamusoe &Lean, 2018 andKizito andHooi, 2018). In a specific term Jones (2002) used a mixture of cross-sectional units and time series data to test for intersection in ECOWAS nations spanning from 1960-1990.…”

Institutional development in transition economies – the role of institutional experience

“…They find that both NATO and EU accession exert positive effects on the institutional development of transition economies. Schönfelder and Wagner (2016) assess the role of European integration for the institutional development of transition economies. Overall, they confirm the positive effect, however they also find evidence of reversals in institutional development; in particular, the deterioration of institutional quality after joining the EU.…”

“…In order to indicate the status or official relationship between the transition countries and the EU, we follow Schönfelder and Wagner (2016) and use a set of dummy variables. Therefore, there are five indicators: Potential Candidate for the EU (PCEU), Candidate Country for the EU (CCEU), Acceding Country for the EU (ACEU), Candidate Country for the euro area (CCEA) and member state in the euro area (MBEA).…”

“…In the present context, this is especially important, since institutional quality is not evolving monotonically. As documented by Schönfelder and Wagner (2016), institutional development also exhibits reversals: for example, control of corruption exhibited reversals after countries became member of the EU. Therefore, observing the overall trend alone might be misleading.…”