Institutional Fragmentation and Trade in the European Union: Judicial Quality as a Barrier to Integration

Despite decades of economic integration, the European Union (EU) remains institutionally fragmented due to substantial differences in judicial performance across member states. This paper examines whether judicial heterogeneity acts as a barrier to trade integration. Using a gravity-based framework, we find evidence that inefficient contract enforcement constrains firms' participation in intra-EU markets. These findings suggest that judicial heterogeneity represents a hidden barrier to trade and weakens the effectiveness of the Single Market. We argue that deeper European integration requires not only economic and regulatory coordination, but also greater judicial convergence towards an Institutional Single Market.