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2.3.2 Empirical Assessment


Academic Research paper and Study of the Economy of Romania and Romanian Business

Up to now some empirical research on the effects of the Single European Market has been done. The conclusions of the most important studies will be reproduced, following the neat outline given by Begg & El-Agraa (2004).[1]

The Cecchini Report

The Cecchini/Emerson report was a quite optimistic ex ante study, issued in 1988.[2] A total potential gain of between 4 % and 6 % of EU-12 GDP (about 200 billions of ECU) and the creation of two million extra jobs were estimated due to the SEM. Even 7 % of GDP and five million additional jobs seemed conceivable to the Cecchini/Emerson report (cf. ibid: 192ff.). The first empirical large-scale study ex post was issued in 1996. The Monti report (Monti 1996) was less enthusiastic and asserted about 1 % additional GDP growth by 1994 and 500,000 extra jobs (Begg & El-Agraa 2004: 194). This somewhat disappointing result was explained by the economic data being limited to the year of 1994. In other words, the short period of time the SEM was achieved and furthermore by the failure of implementing certain parts of the SEM before 1994 or 1995 (cf. ibid: 1994). According to EC (2007 e: 58ff.) several barriers keep to exist even today.

The 2003 Report

Finally, the 2003 report on the SEM, issued by the Commission (EC 2003) proclaimed a 1.8 % higher EU-GDP (164.5 billions of Euros) and 2.5 millions of extra jobs by 2002 “thanks to the internal market” as the EC (2003: 2) sums up. Additionally, exports to third countries had risen and FDI-flows “more than doubled as per­centage of GDP” (ibid). Customers started to enjoy lower prices through increased competi­tion and doing business got much easier (ibid: 2f.). Overall, it is commonly agreed that the SEM has been a success. The EC (2007 e: 8) accounts a 2.2 % increase of EU GDP in 2006 as due to the SEM. Additional em­ployment was estimated to be about 2.75 millions of extra jobs in the same year (i.e. 1.4 % of total em­ployment). Nonetheless, these gains could even be double, if remaining barriers were re­moved (ibid). Among the remaining barriers the following are mentioned: slow or improper transposal of community directives into national legislation (ibid: 58), frictions concerning standards and their mutual recognition (ibid: 59), limited trade and cross-border activity regarding services – despite their outstanding contribution the EU’s GDP of 70 % (ibid: 62) –, and few public procurement, which remains to be opened up to competi­tion (ibid: 62). Other barriers stem from differences in the countries tax-, social security and pension systems (ibid: 72ff.). Regarding the free movement of people, language “is one of the main barriers” (ibid: 73) as 50 % of the EU population do not speak a second language (ibid). Concerning EEUE some conclusions are drawn, too. While the paper admits that EEUE constitutes “a challenge to its [the SEM; SH] proper function­ing” (ibid: 7), no evidence for a disruptive impact on product and labor markets of the SEM have been found yet. Rather the “the economic changes induced by this round of enlargement have been absorbed quite smoothly” (ibid). Anyhow, the risks of tensions seem “augmented” (ibid). The next chapter will add some evidence about EEUE.

Footnotes

[1] Their overview covers the time until 2003. For the later years this paper adds findings from to EC 2007 e. The empirical research including EEUE has to be addressed in chapter 2.4.2.

[2] The findings of Cecchini were published in 16 volumes by the Commission of the European Communities (CEC 1988) and as a summary, widely known as Cecchini report (Cecchini 1988). The latter was addressed to a large public. The “definitive technical work is that by Emerson et al. (1988)” as Begg & El-Agraa (2004: 192) point out. Their findings presented in this chapter are however taken from Begg & El-Agraa (2004), with the exception of EC 2003 and EC 2007 e.