The Role of Economic Growth in the Overall European Projects - Research Paper Example

Introduction The Europeans Unions initial goal was to attain the political objective of peace and unity, but its vitality as well as achievement emanates from its economics involvement. The European Union members account for a significantly smaller portion of the global population. Therefore, they must constantly pull together or unite if they are to maintain economic prosperity and compete favorably in the global stage with other strong economies. Experts agree that no European member state’s economy is solid enough to compete alone in the global trade. Similarly, the European Union economic growth provides countries with a crucial framework for competing efficiently on the world market and containing the effects of the EU economic crisis. This discussion seeks to establish the role of economic growth in the overall European projects. Discussion The original objective of the European project was to enhance the overall economic productivity of the European countries as fragile, minority nations had changed to be increasingly competitive. Similarly, the launching of the common currency (euro) was a fundamental move in the unification of European nations, (Cline and Guntram 52). Similarly, it has been a key achievement in that about 330 million European Union populations utilize it as their currency and benefit from its advantages. Unfortunately, with the current potential of Euro collapse the economic and financial stability of the European Union is at stake. Experts agree that the European project was not created on the notion of restricted economic growth. The guiding principle was to, at the end, gain unity by integrating various facets of EU life together to combat conflict and ensure socioeconomic growth. Unfortunately, with the current condition, it is impossible to assume how appears to dwarf all other EU concerns. Therefore, it is clear that economic growth has an influential function to play in the prosperity and success of the overall European project. The European-broad free economic struggle should be offset by the wider unification of Europe. The economic growth has crucial tangible advantages for citizens of Europe, for instance, when European countries fall victim of global challenges such as, floods and related natural calamities, they get financial help from the European Union economic budget. Similarly, the structural Funds, controlled by the EU commission, motivate and supplement the European Union regional and national powers efforts to reduce economic disparities between diverse regions of Europe. Financial resources (funds) European Union budget and loans from banks (European Investment Banks) are utilized to expand the transport infrastructure in Europe (for instance, to expand the motorways networks and promote high-speed railways), therefore, facilitating an extensive access to remote areas and promoting trans-Europe transactions. The economic success of the European Union will be determined, partly, by the capacity of a crucial market of about less than one billion customers to advantage various businesses and citizens. Economic stability of EU project is crucial because it promotes economic development that results to prosperity and creation of job opportunities, and is a profound goal enshrined in the economic and monetary management of the European Union, as well as the Euro. For instance, under that Monetary and Economic union, the European countries closely organize their domestic policies with the main aim of sustaining economic growth. Similarly, the EU central bank coordinated a unique monetary policy aimed at contained reduced inflations in the euro zone, (Woolcock 75). Low inflation and a firm economy help in creating a crucial atmosphere for sustainable future growth that is beneficial to the members of European unions and their populations. Strong economic basis helps the monetary and economic unions of the European Union to maintain their administration, and insufficiencies under certain limits based on the Stability and Growth Pact rules. These limits form some of the convergence rule that a nation must meet to qualify to use and adopt the common currency (euro). The essential purpose is to allow valuable and strong public finances within the European Union associated and the euro zone region. Strong and sustainable public finances imply that Europeans nations stay within their strategies, and do not accumulate massive debts that will endanger the nest taxpayer generation. In other words, the government may borrow largely to promote economic development and invest; however, this must be a short-term strategy because payment of debts may endanger future economic development in the country. Experts agree that the commitment to strong and viable public finances is like a devotion to ensuring growth of economy and creation of employment in the end. Economic stability aids to ensure present and future citizens’ needs are met for instance, through sufficient provision of healthcare and pensions. Like customers and firms, administrations and their citizens- electorates- benefit extensively from strong economic growth. Low inflation (economic crisis) in a solid, well-organized euro zone makes government loans cheaper. This implies that repayment of interests on country debts that can be large, are minimized, (Cline and Guntram 56). This releases considerable amounts of money of taxpayers, formally used for interests’ repayments, for other functions based on priorities of the nation, for instance, for new national infrastructure, tax cuts and systems of welfare. Additionally, economic power enables governments to coordinate their national revenues, funds and expenditures with increased certainty. Economic growth will also make European Union increasingly resilient to the main external economic downfalls, such as the current economic crisis that had enormous and adverse effects on the member state economies. Similarly, abrupt economic transformations may emerge outside the European Union boundaries and interfere with national economies, for instance a global world increase in prices of oil or turmoil on the world currency markets. Therefore, with strong economic basis European countries will be better equipped to fight the crisis and protect their economic sovereignty. This is because the size and viability of the euro zone enables the nations to absorb and contain external shocks without reduced growth and employment losses. The European project was formed with the original objective of the Euro was to enhance the overall economic productivity of the European countries, as fragile, minority nations had changed to be increasingly competitive. Similarly, the European project aims to foster peace and unity between member states through economic deals. Therefore, economic stability serves to benefit both the people in different nations and create social cohesion between member states. Volatile transformations in the rates of interest and inflation enhance the disparity between the wealthier and poor nations and region; this is because the nations with increased resources have increases chances to safeguard their economies and trade, (Woolcock 78). Strong economic basis facilitates stable rates of interest and inflation thus, the reduced well off are largely secure against wealth erosion, their purchasing power and savings. In addition, strong European Union economy strengthens European economy competitiveness and increases economic growth and employment rates. Economists agree that since economic stability plays a crucial role in the overall European project, economic motives should be balances with a sense for the need for security and peace. For instance, since shared economic policies, currency and structures enhances reduced and steady inflation, and stability in the rate of exchange and strong public finance between members of European Union, it could also be the basis of establishing social cohesion among members. This social cohesion is crucial in that it will bring European Union members together, socially and economically, to fight any social, political or economic challenge that may disrupt their unity as a group. Similarly, strong social and economic base could be influential and necessary when fighting financial crisis experienced by European nations. Similarly, some euro nations with extensive debts experience downward spirals as these debts deepen costs leading to increased tax or low spending. Reducing future costs of borrowing implies increasing productivity – via either layoffs or reduction of wage or both. Therefore, balancing economic motives with a sense of peace and unity will facilitate cohesion and economic support of poor nations by rich ones. Additionally, euro suffers from the disintegrated political authority that controls its economy. Each member state can issue it independent debt; the euro is beneficial and useful in about 16 diverse bond markets. Similarly, each economy designs its own expenditure policies and tax; some nations now experience debts greater than their GDP. Thus, economic and social cohesion may aid in solving and combating such economic challenges. Balancing economic motives with peace and harmony motives will allow economic growth, and stability as companies and businesses in richer nations will start investing and trading with poorer nations thus, boosting their economic stability, (Cline and Guntram 61). Similarly, this will enable poor nations to promote their economic power by reducing their debts without reducing their spending. Additionally, economic integration between European members will reduce the economic and financial disparity between nations at the core and those at the periphery and end the financial crisis Conclusion Economists assert that the turbulence of European economic crisis will continue until economic growth resumes. As long as European Union members hold themselves as separate entities sharing a common currency instead of a united entity with centralized economies, culture and unemployment challenges and pension, the turmoil will persist. This is because the turbulence cannot be contained by referring to the previous patterns, where the rich nations flooded the poor nations with resources to solve trade insufficiencies and private spending promotions. In other words, strong economic basis and strong social cohesion are the key factors to solve economic challenges and boost unity and economic integration between European Union members. Works cited Cline, William R, and Guntram Wolff. Resolving the European Debt Crisis. Washington, DC: Peterson Institute for International Economics, 2012. Print. Woolcock, Stephen. European Union Economic Diplomacy: The Role of the Eu in External Economic Relations. Farnham: Ashgate, 2012. Print. Read More