The EU and North Rhine-Westphalia have long-standing, intensive economic ties. With a view to the European elections in June 2024 and the economically challenging times that England has faced since leaving the EU, the study of the economic relations between North Rhine-Westphalia and the EU is becoming particularly relevant.
Against this background, this study examines the extent to which companies based in North Rhine-Westphalia benefit from the EU, what influence this has on jobs and prosperity and what possible effects political decisions could have on these connections.
First, the connections between North Rhine-Westphalia and the EU are analyzed from two perspectives:
- The analysis of the trade links between the two regions provides insight into the extent and type of economic relations between North Rhine-Westphalia and the EU. Both the industry and country composition of the trade data are examined. Comparisons of economic networking with the national average also point to specific dynamics and potential. In a further step, an input-output analysis is used to precisely quantify the added value that arises in NRW companies from nationwide EU exports. Not only are the economic activities in North Rhine-Westphalia secured directly through exports recorded, but the effects along the value chains can also be taken into account. This includes the indirect effects (the economic activity that is stimulated by intermediate purchases by exporting companies in North Rhine-Westphalia) and the induced effects (which arise from the consumption of the previously calculated employees in the exporting companies and their suppliers). The identified effects are also broken down to the local level.
- An analysis of the direct investment stocks between the EU and companies in North Rhine-Westphalia provides evidence of strong financial ties between the two regions. The data on EU direct investments are compared to investments from other international sources in a comparative analysis. This shows how significant the EU’s role as an investor in NRW companies and as a target country for North Rhine-Westphalia investments is compared to the rest of the world.
This is followed by a counterfactual assessment of the extent to which NRW would suffer if the EU integration no longer existed. The synthetic control method is used as a statistical procedure that estimates the hypothetical GDP path of NRW if there had been an analogous referendum such as the 2016 Brexit referendum in NRW. Comparing the hypothetical with the actual GDP path provides a robust estimate of the effect of a NRW exit on the gross domestic product and also on the number of jobs that would be threatened by a NRW exit.
Overall, this creates a comprehensive picture of how much added value and jobs in North Rhine-Westphalia are secured through trade, how closely North Rhine-Westphalia and the EU are connected to each other through direct investments and what the effects of a counterfactual withdrawal of North Rhine-Westphalia from the EU would be.
2024-03-12 11:50:26
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