Relative Centrality or Peripheriality and the Growth Effects of Relative Centrality or Peripheriality and the Growth Effects of Economic Integration within the European Union

In the paper we construct two novel indices of relative centrality – peripheriality in order to test whether location has an impact on medium and long-run gains related to economic integration within the European Union. We utilize two popular econometric approaches – standard cross- sectional growth regressions as well as dynamic panel data models. The study is undertaken for a data panel consisting of 27 developed economies (15 EU Member States and 12 non-member states) within a period 1960 and 1999. Our results indicate at least to some extent that in accordance with the new economic geography models (NEG) relative location within large regional integration arrangement such as the European Union could affect growth effects associated with economic integration. Furthermore, the benefits are found to be asymmetrical between the core and peripheral regions. This results, however, need further empirical investigation as they are found to be sensitive.