European Integration and Manufactures Import Demand: An Empirical Investigation of Ten European Countries

Abstract

Abstract This paper studies import demand in ten European countries over the period 1970±95, and our objective is to investigate whether the process of European integration has affected imports. We provide evidence for parametric change in traditional import demand equations, suggesting that important variables or structural factors are missing from the long-run equations. We present equations based on new trade theory, where effects of technology and foreign direct investment are present. Once we include these there is little evidence that the creation of the Single Market has directly increased aggregated imports in European countries.