The economic globalization processes and the EU integration dynamics are undoubtedly considered to be a significant driver of aggregate economic growth at a global and national level. Free trade, cross-border investment and free mobility of capital and labor have been at the heart of the subsequent rounds of deepening and widening of the EU integration process. However, the distributional effects at the sub-national level have been highly debatable in both the academic and public arena. The current analysis is partly nested within the debate of the distributional dynamics of the EU integration process and is extended to cover the potential strong associations it entails with the rise of discontent at both the national, regional and EU-wide level. The key issue which constitutes the departing point of our analysis is that the acceleration of the integration processes does not always allocate costs and benefits evenly among advanced and less advanced regions and countries. Weaker regions with structural deficiencies in their productive base face severe difficulties to compete with the advanced regions in a more integrated market and experience pressures in their labor markets, public finances and income levels (Rodriguez-Pose, 2012).
This research project intends to provide the theoretical justification and sound empirical evidence on the complex interplay that forms the interactions and interdependencies between growth performance, economic integration, regional inequalities, political discontent and the current policy mix in the EU.
Most importantly, it intends to initiate a “dialogue” between two significant but distinct strands of literature, and provide a holistic approach to better understand the deficiencies of the European economic model, to estimate the impact of specific drivers of growth, inequality, discontent and (dis)integration and develop specific policy recommendations that will fine-tune the performance of the European model. The proposed research will pay particular emphasis on the drivers and the factors conditioning discontent and its varying expressions in highly heterogeneous social, historical, geographical institutional and cultural settings. It will also unveil the mechanisms and channels that allow political discontent to affect economic and regional performance and policy options at the national, regional and EU level. Finally, the proposed research project will examine empirically to what extent political discontent (or the ‘revenge of the places that don’t mater’ (Rodriguez-Pose, 2017) brings systemic changes to the basic model and makes EU policies, and perhaps the very process of integration, an endogenous variable driven by internal dynamics and not an axiomatic doctrine.
The interrelated effects of multiple phenomena
Empirical strategy
The proposed research questions will be evaluated by means of advanced econometric modelling using a system of equations (3SLS) including reduced forms and following panel and spatial econometrics methods followed by endogeneity checks with the use of instrumental variables. Each econometric equation will model one of the main variables of the analysis (regional performance, integration, discontent and policies) in an interacting, dynamic and perhaps non-linear pattern. The estimated equations will provide insight into the predictions on the neoclassical and endogenous growth theories in explaining long-term and short-term convergence and divergence trends that mirror the inequalities and the existing policy choices behind the spatial patterns of discontent.
Conceptualization of inter-related effects and the econometric estimation equations
| REGit = f {INTit, DISit, POLit, CONTROL1it} |
| INTit = m {REGit, POLit, COTROL2it] |
| DISit = z [REGit, POLit, CONTROL3it] |
| POLit = q [REGit, DISit, CONTROL4it] |