The Relationship Between the European Union Accession Process and the Institutional Quality of Acceding Countries

Abstract: Studies on European Union accession process (EAP) have mainly examined the relationship between the integration process and economic growth. Hitherto, much emphasis has been placed on examining the sources of institutional convergence and evaluating the framework of the (EAP), rather than focusing on the effectiveness of the implementation itself. In other words, little research on de facto improvement of institutional quality stemming from the EAP exists. The paper aims to further explore the relationship between the EAP and improvement of institutional quality. To quantify this relationship, we employ robust econometric methods and analyze a panel data set in the period 1996-2011 of eight economies that are currently subject to the enlargement of the European Union. Based on the World Bank Governance Index, our results show that there exists a positive relationship between the EAP and the institutional quality in the acceding countries, where one step in the accession process is associated with a 0.012 point increase in the governance index.