SPECIALIZATION AND ECONOMIC INTEGRATION POLICIES IN EUROPE

This thesis studies the effect of economic integration policies on specialization patterns in EU countries during the period from 1985 to 2012. We focus on the effect of access to the European Economic Area, and the use of the euro as a currency, two major, recent milestones of European integration. The effect of these integration events on GDP distributions, and in particular the shares for the overall manufacturing sector, the information & communication sector and the financial & insurance sector is studied by use of Gini coefficient analysis and panel data regression analysis. We make some interesting findings. First, graphical representations of the Gini coefficients do not show clearly that around the time the integration events take place there is a change in specialization patterns. This means that the shocks are not that severe and the changes are more subtle. Second, the panel data regression analyses show some interesting results. We find significant results of the effects of both integration events on sector shares for some countries. These are mainly the countries that have recently joined the EU – where a deeper adjustment and integration path applies. We mainly find that Eastern European countries increase their manufacturing sector share and Western European countries increase their financial sector share. These findings are in line with the general economic development trend in the countries, because they show a decrease in agricultural sectors, a de- or increase in manufacturing sectors, depending on the level of development, and an increase in service sector shares.