On the Fate of Newcomers in the European Union: Lessons from the Spanish Experience.

The removal of barriers to trade and mobility is usually promoted as it allows for greater division of labor and, thereby, for improved economic welfare. Recent theory, however, suggests that the integration of markets might have serious consequences for the regional allocation of economic activity. By focussing on European economic integration and the experience of Spain joining the EU, the paper shows that this view frequently stems from a competitiveness approach to economic integration which need not hold on an aggregate level.