Can European Union (EU) Enlargement Boost Regional Economic Common Growth? Multi-Period Difference-in-Difference (DID) Method

Abstract

Under the dual background of Britain’s blatant “Brexit” and the steady “expansion” of the European Union (EU) audit list, the economic effect of the development of regional alliances, in the end, is a question worthy of in-depth discussion. Using data from a sample of 27 EU member states from 2000 to 2018, this study examines and compares the impact of EU enlargement on economic growth for countries as a whole, developed and developing countries, and Central and Eastern European (CEE) countries using a multi-period difference-in-difference (DID) method and explores the mechanisms underlying that. The results show that EU enlargement contributes to the expected regional economic growth, and the effect is more evident in developed countries and CEE countries; the robustness of the results is tested by the dynamic effect test and counterfactual method; EU enlargement improves the spatial allocation of factor markets through regional integration, increases productivity, and positively promotes the overall national economic growth. As a typical quasi-natural experiment of the development of regional integration, the research results of this study on the enlargement of the EU provide a useful reference for the promotion of the development of cross-administrative integration around the world.