European Integration: Some stylised facts

Table 1: Rating of the degree of integration

	Rating		Comments
Microeconomic convergence: a Markets for goods and services
	Tradeables	+++	intense intra-EU trade, nearly Full equalisation of prices
	Partly tradeables	+	Increasing trade flows, some Equalisation of prices
b	Non-tradeables Markets for factors of production	0	By definition no trade flows, no Equalisation of prices
	Labour market	0	No mobility and hence, no Equalisation of wages
Market for real capital Macroeconomic convergence: c Nominal convergence		++	Some mobility manifested through FDI flows, mergers and acquisitions - equalisation of real profit rates
	Price level	++	Labour intensive non-tradeables cheaper in poor countries, hence not full equalisation of price levels
	Inflation rates	+++	intense intra-EU trade and stable exchange rates (especially the introduction of the euro) have lead to a convergence of inflation rates
d	Nominal interest rates Real convergence	+++	massive cross-border financial activities in the framework of stable exchange rates has lead to a convergence of interest rates
	Business cycle synchronisation	+	Member state specific business cycles because of different economic structures and lack of co-ordination of fiscal policy
	Unemployment	0	No equalisation of employment because of country specific business cycles and different labour market structures
	Living standards	+	Mixed trends of convergence of living standards because of ambiguous effects of mobility of goods and resources on spatial distribution of economic activity

Note: Rating of integration according to outcome, i.e. degree of equalisation between Member States.
Ratings from 0 (no integration) to full integration +++++.

Source: Own adaption.

Markets for goods and services

The formation of the customs union and the Single Market has as expected
increased the intra-EU trade as shown in Figure 1. Also the trade between the

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