Assessment of the degree of interstate integration within the european single market

Abstract

The object of the study is a quantitative assessment of the degree of integration in the European Economic Area (EEA), which is a single market with 36 countries participating. The growing disparity and the development of centrifugal forces make a detailed study of the degree of European integration in demand. The authors have developed Markets Integration Index, which allows to assess the degree of interstate integration in general and for individual markets: goods market, services market, labor market and capital market. The study of the degree of integration using the devised Index makes it possible to analyze the contribution of individual markets to the country’s integration into the EEA; the Index can also be used to study other integration groupings. For the EEA as a whole, the highest values of the Index are observed for the free movement of goods, while the lowest values are observed for the free movement of capital. The highest level of integration in the EEA is observed in the offshore economies and countries of Central and Eastern Europe, while the lowest level is observed in the region’s largest economies and a number of Eastern European countries. In the goods market, the most integrated countries are the export-oriented and import-dependent states of Eastern Europe; Belgium and the Netherlands, due to re-exports. In the services market, the leadership belongs to the tax havens and small Eastern European countries. In the labor market, due to the overlapping patterns of regional and international migration, the countries of Western Europe, mostly small ones, are leaders in integration. In the capital market, the most integrated countries are tax havens and smaller Eastern European economies, the latter achieving the Index values due to the share of investments from the EU. The same level of integration can be achieved through the interpenetration of different markets, which describes the development of national economy.