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Thursday, April 24, 2014

How poorer nations benefit from EU membership (BUT NOT Greece) | vox

How poorer nations benefit from EU membership | vox

Greece as the outlier

Overall, these results show substantial increases in per capita GDP for all countries that joined the EU in the 1980s and in 2004, with one exception – Greece. The results suggest that Greek per capita GDP would have been higher if Greece had not joined the EU in 1981. But does this imply Greece would be better off leaving the EU as quickly as possible? Obviously not. From 1981 to 1995, growth rates in the EU were relatively higher, and Greece experienced divergence (Vamvakidis, 2003). The opening up of the uncompetitive domestic industry may have been too sudden.4 Yet, entry into the economic and monetary union represents a turnaround, with growth rates faster than in the EU for 1996-2008, driven by shipping, tourism, and the financial sector. Mind the latter is one of the few sectors in which structural reforms were implemented (Mitsopoulos and Pelagidis 2012.) Until the Eurozone crisis, integration delayed a broad range of structural reforms in Greece. Signs are that this is now slowly changing (Fernández-Villaverde et al. 2013).
The Economist 's Free Exchange Blog adds:

The sliver of hope for Greeks, if there is one, is that this state of affairs suggests that an improvement in macro and micro policy could lead to really rapid catch-up growth, as Greece finally reaps the benefits of full integration with the EU and makes up its current output shortfall. But what a long, painful, disillusioning road to get there.

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