Overall single market benefits

• Author: Petropoulos, Georgios; Marcus, J. Scott; Yeung, Timothy
• Pages: 30-38

IPOL | Policy Department for Economic, Scie ntific and Quality of Life Policies

30 PE 631.044

3. OVERALL SINGLE MARKET BENEFITS

In Secti ons 3 .1 and 3.2 of this chap te r, respectively, we consider a range of current and previous

studies that assessed either ex ante or ex post the be nefits of str engthe ning the European Singl e

Market. The assessments in these se ctions do not limi t themselves to digital aspects. W e th en c lo se

with a review in Section 3.3 of assessments of benefits specific to the Digital Single Market.

The EU’s Single Market is characterised by the so-called Four Freedoms: fre edom of movem ent of

goods, services, capital, and individuals. For this study, our primary concern is with measures to

prom ote the free fl ow of goods and s ervi ces.

KEY FINDINGS

Numerous estimates of the gains produced by the Single Market have been made over the y ear s,

using a r ange of metho dologies and assump tions, and arri ving at a range of conc lusions.

We concur with the key findings of the comprehensive literature survey provided by Dahlberg

(2015), which was bas ed on most of the sam e studi es t hat app ear i n Sect ions 3 .1 and 3.2 of thi s i n -

dept h analysi s:

•“The single market has been a significant enabler for economic growth in Europe.

Comparisons are not easily done, but 2-4 per cent seems to be in the ballpark.”

•“This effect primarily seems to have run through the free movement of goods and

capital –the intra-EU trade and investment flows have experienced significant

increases since the implementation of the single market.”

•“The single market does not seem to have affected the flows of services and people to

a significant extent.”

•We have not identified any definitive ex post findings on the impact of free

movement of services.

•Single Market gains due to free movement of services appear to have been limited

and uneven, and there are some indications that price mark-ups in the services sector

have actually increased. Given that services represent some 70% of European

GDP and employment, this is worrisome.

Dahlbe rg’s estim ate of gains of 2-4% of GDP implies that the Single Market currently generates

between € 340 and € 680 billion per year in benefits for the EU.

If it wer e as easy to p urchase goods cross-bor der as dome sti cally, pr ice converge nce would le ad to

prices that are lower by 1.0% for goods purc hased onli ne and 0.5% for good purchase offl ine.

Consumer and producer surplus would increase by 1.2% and 1.4% each. The DSM Strategy as

enacted to date realis es only a fraction of this gain. We estim ate that some € 36 bi llion per ye a r in

additional consumer gains alone remain to be realised.

Beyond this, broadband deployment and adoption clearly contribute to societal welfare.