Has European Economic Integration Failed?

Abstract

Economic growth accelerated after the Second World War when per capita income growth accelerated to 2.9 percent per annum from 1950–89 compared with only 1.3 percent 1870–1950. Even without taking account of the benefits of increased leisure, social security, and improved health and social services, this acceleration in economic growth was a remarkable achievement. Although rapid growth has not been restricted to Europe, advocates of unrestricted free trade have credited the European Economic Community with raising European growth rates. Europe’s slow recovery after the First World War had persuaded many that the existing national borders contained markets too small to realize gains from mass production and modern technologies. Repeating views popular among socialist critics of European capitalism, advocates of economic integration argued that Europe’s businesses needed a larger scope to compete with continental powers like the US and the Soviet Union (Griffuelhes, 1910; Landes, 1949; Lorwin, 1958). Economic integration, it was hoped, would give Europe’s relatively small states the wider scale they needed to compete with businesses from continental-sized countries. Business productivity would bring in its wake prosperity, peace, and the political influence that comes with economic success.