Economic Integration, Industrial Structure, and Catch-up Growth : Firm-Level Evidence from Poland

This paper examines if and how deeper economic integration with high-income nations impacts industrial performance. It exploits Poland’s accession to the European Union in 2004 as a source of variation in the degree of market integration with Germany. Using data on Polish manufacturing firms over 1995–2013, the paper finds that EU accession was followed by significant within-firm growth in output and productivity, notably in industries in which Germany was more specialized at the moment of accession. Increased flows of German investment to these sectors played an important role in shaping these effects.