Year: 1989
Type: article
Abstract: The growth effects of 1992 Richard Baldwin The Cecchini Report estimates that 1992 will raise the output of the European Community by between 2.5 and 6.5%. If the effect is so small, why is everyone so excited? These numbers are so small because the Cecchini Report only measures 1992's one-time effects on productivity and output. It does not attempt to quantify the growth effects. Yet if the latter exist, they are likely to dwarf the one-time gains. The growth effects can be described in theory and measured, in practice. Even if 1992 has no permanent effect on European growth, it will bring a medium-run growth bonus. Higher productivity will improve the savings and investment climate in Europe. The resulting extra investment will provide a medium-run output effect proportional to the one-time efficiency gain. This effect is likely to be of the same order of magnitude as the one-time effects measured by the Cecchini Report. With scale economies, completing the internal market may also permanently increase Europe's growth rate: Attempts to quantify this effect suggest that it could be the largest of all.
Source: Economic Policy
DOI: 10.2307/1344471
Authors: Richard Baldwin, Pierre-Andre Chiappori, Anthony Venables
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1523372172