On October 28 the Honorary Lectures on Political Economy in Memory of Alberto Alesina opened at NES with a lecture by Guido Tabellini, Professor of Economics, former Rector of the Bocconi University (2008-2012), Foreign Honorary Member of the American Academy of Arts and Sciences and former President of the European Economic Association (2007). In his presentation “Is Europe an optimal political area?”, the professor talked about the last paper that he wrote with Alberto Alesina and Francesco Trebbi from the University of British Columbia. Employing a wide range of individual-level surveys, they studied the extent of cultural and institutional heterogeneity within the EU and how it changed between 1980 and 2008 in EU-15 countries plus Norway.
The research found that the stumbling block in the European political integration is not so much in the difference of countries, but rather it is more the sense of national identity which actually reflects more stereotypes and traditions than fundamentally important cultural diversity. This raises the question of the cost of dealing with individual (on the national level) preferences which make decision making on the level of the political union more difficult.
How much similar or different are EU states and citizens?
On average, two Europeans belonging to different countries are more different than two Europeans belonging to the same country. But the striking fact is that people are not much more different between countries: for example, an Italian and a German are different, but two random Italians are almost equally different. And this cultural distance is largely unexplained by the observable features like social, economic traits, and geographic distance. Similarly, although the economic core and the cultural core coincide, the economic periphery does not seem to be a cultural periphery in terms of cultural traits: Greece, or Spain, or South Italy are not that more different than many regions in France and in England. This is important because if economic differences combine with cultural differences, it makes political integration more complicated. This picture reinforces the point that there is a lot of heterogeneity within countries. Compared to the US, it can be said that the heterogeneity that there is between the EU states is similar to the observed heterogeneity in cultural traits between the US states. The lack of convergence is not just the feature of between-countries distances, it's also shared within countries.
As one would have expected, individuals who are more distant from the center are more Euroskeptic. However, a very big reduction in cultural distance is associated with a very small reduction in Euroskepticism. This, in its turn, reinforces the point that it is not likely that heterogeneity of preferences is at the core of what prevents further political integration in Europe.
Is the convergence of the EU states deepening?
From an economic point of view, we could expect that integration brought about some cultural convergence because people and states interact more frequently through trade and migration, and share more similar policy challenges. But at the same time, people have become more dissimilar everywhere within Europe, as well as the US. One reason could be that trade integration leads to economic specialization. Another reason why Europeans have become more different is in the increased heterogeneity within countries. People have all become more different, for the reasons that have yet to be understood, but the social media and the Internet may be responsible for these increases in heterogeneity.
In terms of the quality of their government, countries were becoming more similar before 2000. But since then, they have diverged, and the same was observed in the quality of legal institutions which is not very encouraging for European integration. However, positive developments happened in the PISA scores and the regulatory environment. So there was some divergence in some dimensions, and some convergence in others.
How to reach further integration?
The heterogeneity in the deeply held cultural traits does not seem to be a stumbling block for further integration, despite the lack of institutional and cultural convergence. The Covid-19 pandemic has allowed Europe to take an important step forward. But the reasons preventing deeper political integration are linked to national identities – Europeans receive ourselves as nationals. Despite the rise in national identity, European identity has not weakened in the sense that about 50% of respondents say that they feel both national and European. However, the importance of nationalism has increased, reflected in the rise of populist movements.
To achieve more political integration and to take advantage of the economy of scale in provision of public goods Europeans should understand that they are not that different and overcome national identity, which is good in many ways, but at this particular moment in history it prevents the benefits of a political union. To enrich European identity, public education can be a key policy instrument along with common elements of the European curriculum that would focus more on the EU institutions, history, and what makes Europe unique in the world. In this respect Brexit, although very sad and undesirable from the perspective of European integration, may have the benefit of making it easier for the remaining countries to move forward.