Identifying European Economic Integration and Globalization: A Review of Concepts and Measures

Abstract

Krieger-Boden C. and Soltwedel R. Identifying European economic integration and globalization: a review of concepts and measures, Regional Studies. Processes of regional economic integration such as the European integration process have been shaping the economic relations between countries significantly during the last decades. At the same time an increasing integration of all national economies into the global economy has affected these economic relations, too. In an effort to contribute to operationalizing these integration processes for the purpose of empirical analyses, this paper reviews the concepts and actual measures of European integration and globalization. In particular, it discusses ways of separating the effects of European integration from those of globalization, thereby also reducing problems of endogeneity and collinearity.

Krieger-Boden C. and Soltwedel R. 识别欧洲经济整合与全球化：概念与方法的回顾，区域研究。过去数十年来，区域经济整合的过程，如同欧洲的整合过程，已显着地形塑了国家之间的经济关係。同时之间，所有的国家经济逐渐整合至全球经济中，亦影响了这些经济关係。本文回顾欧洲整合与全球化的概念与测量方法, 以期能使这些整合过程可用于实务研究分析。本文特别探讨将欧洲整合的效应与全球化效应分离的方法，藉此减少内生性与共线性的问题。

Krieger-Boden C. et Soltwedel R. Identifier l'intégration économique européenne et la mondialisation: une étude des notions et des procédés de mésure, Regional Studies. Les processus d'intégration économique régionale, tels que le processus d'intégration européenne, ont sensiblement déterminé les rapports économiques entre les pays au cours des dernières décennies. Également, une intégration croissante de toutes les économies nationales dans l’économie mondialisée a touché simultanément ces rapports économiques. Pour rendre ces processus d'intégration opérationnels aux fins d'analyses empiriques, cet article étudie les notions de l'intégration européenne et de la mondialisation et les procédés de mésure. On discute notamment des façons dont on peut distinguer les effets de l'intégration européenne de ceux de la mondialisation, réduisant ainsi les problèmes d'endogénéité et de colinéarité.

Krieger-Boden C. und Soltwedel R. Identifizierung der europäischen wirtschaftlichen Integration und Globalisierung: Untersuchung der Konzepte und Maße, Regional Studies. Regionale Integrationsprozesse wie derjenige der Europäischen Union haben während der letzten Jahrzehnte die ökonomischen Beziehungen zwischen den Ländern entscheidend verändert. Gleichzeitig sind diese Beziehungen auch durch die zunehmende Integration aller Volkswirtschaften in eine globale Weltwirtschaft beeinflusst worden. Dieser Artikel will dazu beitragen, solche Integrationsprozesse für die Zwecke empirischer Analysen zu operationalisieren, und er untersucht dazu verschiedene Konzepte und bestehende Maße für die europäische Integration und für die Globalisierung. Insbesondere werden Möglichkeiten diskutiert, die Wirkungen der europäischen Integration von denjenigen der Globalisierung zu separieren und dabei auch Probleme der Endogenität und Kollinearität zu vermindern.

Krieger-Boden C. y Soltwedel R. Identificar la integración económica europea y la globalización: un análisis de conceptos y medidas, Regional Studies. Los procesos de la integración económica regional, tales como el proceso de la integración europea, han condicionado en gran medida las relaciones económicas entre los países durante las últimas décadas. Al mismo tiempo, una creciente integración de todas las economías nacionales en la economía global ha afectado también a estas relaciones económicas. Con el objetivo de contribuir a la aplicación de estos procesos de integración en los análisis empíricos, en este artículo analizamos los conceptos y las medidas actuales de la integración europea y la globalización. Examinamos especialmente cómo se pueden separar los efectos de la integración europea de los de la globalización, evitando así los problemas de endogeneidad y colinealidad.

• Economic integration
• Globalization

• 经济整合
• 全球化

• Intégration économique
• Mondialisation

• Wirtschaftliche Integration
• Globalisierung

• Integración económica
• Globalización

JEL classifications:

• F14
• F15

Acknowledgements

The authors thank Eckhardt Bode for intense discussions on the paper and for numerous fruitful suggestions. The authors would also like to thank two anonymous referees for much elaborated, very useful comments and suggestions. Any remaining faults are the authors' alone, however.

Notes

1. Other prominent examples are the North American Free Trade Agreement (NAFTA) and the Asia-Pacific Economic Cooperation (APEC). For a comprehensive overview on regional trading blocs, see Frankel (1997).

2. These costs may include obtaining permissions and allowances, paying charges, taxes and tariffs, closing contracts in a foreign language under foreign law, insuring freight, processing payments, or opening up foreign markets for the objects in question.

3. The examples of countries such as the UK, which has chosen not to participate fully in the EU, or North Korea, which has isolated itself almost completely from the global economy, indicate that national governments do, in fact, have a choice.

4. Some authors already claimed the ‘death of distance’ (Cairncross, 1997). However, markets remain far from being universally integrated (for example, Anderson and van Wincoop, 2004; Brakman et al., 2006).

5. Egger et al. (2011) assess the effects of a preferential trade agreement (PTA) by an empirical model derived from structural new trade theory, treating PTA membership as endogenous and approximating it by endogenous binary indicator variables.

6. The Single Market of the EU, for example, was not established or completed at the end of 2002, as was announced in official EU documents. It has rather been established gradually by a large number of single steps since the mid-1980s, and is still not fully completed by today.

7. These countries might in turn be influenced by the impacts of their own processes of regional integration (for example, APEC), an effect that ought to be regarded in such approaches.

8. The ECB Index does not include any policy measures designed to accompany and accommodate the EU integration process, such as the EU cohesion policy via the EU Structural Funds. It is debatable whether this should be included.

9. The integration of any new member during this transition period is modelled as linear increases of the indices for simplicity, unless distinct information on accelerations or drawbacks in this process is available. Such accelerations or drawbacks are events such as, on the one hand, advanced unilateral tariff reductions as in Spain in 1979, or, on the other hand, the new installation of state-owned enterprises as in Greece in 1983 (this installation has, however, been out of effect in 1990–1992). Information on such events has been drawn in particular from OECD Economic Surveys (for various countries and various years); moreover, from Schrader and Laaser (1994), Laaser (1997), Preston (1997), and Vanthoor (2002).

10. In fact, Hiller and Kruse (2010) show that integration events complying with these stages are highly influential on trade intensities.

11. United Nations Conference on Trade and Development (UNCTAD)-Trade Analysis and Information System (TRAINS) Database (available at: http://r0.unctad.org/trains_new/index.shtm).

12. World Bank Doing-Business Database (available at: http://www.doingbusiness.org/CustomQuery/).

13. The IEF Index by the Heritage Foundation draws on many similar raw data as the does EFW Index. Amazingly, however, indicators in this field of governance may also depend decisively on political preferences that steer the appraisal and weighing of such raw data. As a result, the values of both indices are not correlated (cf. Table 4).

14. ETH Zürich (2011) KOF Index of Globalization (available at: http://globalization.kof.ethz.ch/).

15. Thus, the correlations between KOF and EFW indices were much stronger for the data provided earlier.

16. Country-by-country cross-time correlations and year-by-year cross-countries correlations are not shown here, but are available from the authors upon request. The latter reveal no explicit time trend, in contrast to the correlations of the ECB Index with globalization indices (as shown below).

17. Correlations for the world trade index and time trend are zero because they do not vary across countries.