An Analytical Report on How the Schengen Agreement has Impacted Economic Productivity in the Region

Abstract

The Schengen Agreement was created to allow for free movement of people, goods, services, and capital in the Schengen area. Due to  the COVID 19 pandemic, some member nations have enacted temporary border controls to stop the spread of the coronavirus. As a result, many members  are questioning the relevance of this Agreement. This study examines the impact of the Schengen agreement on member nations’ economic productivity. To determine whether the difference in Gross Domestic Product (GDP) growth before and after becoming a member of Schengen is due to chance alone or the result of the Schengen agreement; three groups of data on annual GDP growth were acquired: annual GDP growth of Schengen member nations and Non-Schengen European nations, as well as annual global GDP growth. The timing of member enrollment was also considered. While it was hypothesized that the annual GDP growth of a nation would differ by a statistically significant amount after joining Schengen, multiple two sample, two-sided T-Tests and one sample, two-sided Z-Tests found that, overall, the differences in GDP growth were not significant enough to demonstrate joining Schengen positively impacted GDP growth. It must also be noted that there were other overarching trends found in the data, including the impact of the 2007-2008 global fiscal crisis on GDP growth for the three groups. Further research into other unique aspects of Schengen is needed to explain these other effects.