Measuring the impact of legal and administrative international barriers on regional growth

Abstract

Country borders are traditionally interpreted as barriers to trade, since they limit the access to large markets of goods and intermediate assets, with negative effects on production, employment levels, and growth. The European Union is not an exception in this respect and, despite the establishment of the European Single Market, legal and administrative international barriers still exist, affecting economic growth. This paper focuses on the areas where costs and benefits of missed integration and the integration potential are highest, namely, border regions, with the aim to provide the costs of non-Europe at regional level. Results show that the costs of non-Europe are still relevant and justify the need of the European Cross-Border Cooperation Program in the next programming period. Useful guidelines for addressing the next programming period are provided. KEYWORDS border effect, borders, costs of non-Europe, legal and administrative barriers, regional growth JEL CLASSIFICATION R11

The role of open borders and cross-border cooperation in regional growth across Europe

“…Their results suggest that cross-border cultural obstacles are the most critical barrier to European border regions' growth. In a follow-up study on the same topic from a formal institutional viewpoint, Camagni et al (2019) also argue that legal and administrative barriers still affect the economic growth of European border regions despite the formation of the European Single Market. They estimate that removing legal and administrative barriers would allow European border regions to be 8.7% richer than they presently are.…”

“…The two alternative models yield more conservative results, but they are not statistically different from the baseline estimation. If we make a comparison with another recent finding in the literature, Camagni et al (2019) estimate European land border regions' total output loss due to legal and administrative border barriers at 8.7%. However, it is worth mentioning that the two studies are not directly comparable.…”

“…However, it is worth mentioning that the two studies are not directly comparable. Camagni et al (2019) follows a regressionbased simulation procedure by using regional gross domestic product (GDP) data from 2008 to 2013. Our paper uses a quasi-experimental design for a larger time span from 1990 to 2015.…”

“…They include the regions' geographical characteristics, traditional growth factors, knowledge-based growth factors, as well as agglomeration economies, cultural assets and country dummies to account for cross-country heterogeneity. These controls are selected in line with the literature findings (Camagni et al, 2019;Capello et al, 2018a;Cuaresma et al, 2014;Hascic & Mackie, 2018;World Bank, 2009). Their data are sourced from the EC's (2016a) border needs database.…”

“…When it comes to Europe's border regions, the EC's (2015) cross-border cooperation (CBC) survey, and its 2016 study entitled 'Collecting Solid Evidence to Assess the Needs to be Addressed by INTERREG CBC Programmes' (EC, 2016a) are two pioneering pieces of work as part of its new empirical approach. The data collected and compiled under these two initiatives have already been used in several studies within a very short time after they become available to the scholarly community (Camagni et al, 2019;Capello et al, 2018a;Durand & Decoville, 2020).…”