Economic Integration has been the Most Concrete and Visible Achievement of the EU Since its Creation - Essay Example

?Economic Integration has been the Most Concrete and Visible Achievement of the EU Since its Creation Table of Contents I. Introduction 3 II. Conceptof Economic Integration 4 III. Overview of Economic Integration in the European Union 5 III. a. Achievements 7 III. b. Evaluation 9 IV. Conclusion 11 References 12 I. Introduction The decision concerning economic integration is often regarded as a major consideration in the European Union (EU) which tends to facilitate to build an effective and rigorous framework of monetary practices of the member nations. It is principally recognized as a form of integrating monetary standards which has been witnessed to facilitate the member nations to independently develop their economic stability. The process of economic integration has been developed by the EU through involving the facet of political integration amid the member nations in order to establish a well-built monetary paradigm which could facilitate to strengthen the trade activities through considering efficient monetary guidelines (Seller, 2007). Political integration has been considered as the practice whereby countries pass over the desire as well as the ability to perform domestic and foreign guidelines of each other in an independent manner. This process is intended to strengthen decision making process of the nations rather than seeking mutual decision in terms of developing their new central organ. The term ‘political integration’ is also defined as a framework whereby the political leaders in different settings of national districts are influenced to alter their desired expectation as well as political activities to a well-structured new centre (Bache & et. al., 2011). Emphasizing upon the different practices and decisions of the EU in the context of monetary phenomenon, the major purpose of this report is to discuss the concept of economic integration in the EU. Moreover, the discussion of this essay would also demonstrate the achievements and their critical evaluation emphasizing upon the decisions of economic or monetary integration within the EU. II. Concept of Economic Integration In general, the concept of economic integration can be considered as an association that constitutes different economic policies among different nations by conducting any partial or full elimination of the tariff as well as non-tariff barriers upon the trade activities. The process is intended to uphold lower prices both for the distributors and customers with the intention of enhancing the joint economic efficiency of the nations (Jovanovic, 2002). The concept of economic integration has been derived from Economic and Monetary Union (EMU) which had been taken by the European Council in the year 1991 and was preserved later under the treaty of EU. EMU has been recognized as an early step in terms of practicing the process of economic integration. The extent of economic integration can be segregated into six different steps which are designed to augment efficiency and empower the economic development of the states. In accordance with the economic integration process designed by the EU, the six major steps are namely the Preferential Trading Area, Free Trade Area, Customs Union, Single Market, Economic and Monetary Union as well as Complete Economic Integration (European Commission, 2012). Preferential Trading Area (PTA): Preferential trading areas (PTA) can be stated as certain areas, regions, states or nations among which the trade activities are conducted in a minimum custom barrier (Holden, 2003). Free Trade Area: It can be recognized as a group or collection of certain countries that appeal to maintain low trade policies as well as control mechanisms in terms of tariffs while performing trade activities amid each other. Free trade areas endorse the approving nations to freely execute trade activities of their products and/services so as to create economic efficiency of both the countries (Rodrigue, 2013). Customs Union (CU): The step tends to set widespread external tariffs between the member nations and ensures to determine that the similar tariffs are also applicable for the third member countries. CUs are significantly useful for the member countries to obtain competitive advantage of conducting re-export activities (Holden, 2003). Single Market: The step facilitates the member countries to obtain the authority of freely trading their goods/services, labor and capitals among others with other member nations (Holden, 2003). Economic and Monetary Union (EMU): EMU can be considered as a common market that preserves widespread trade and economic policies for the member nations while performing trade activities between each other (European Commission, 2012). Complete Economic Integration: It is regarded as a harmonized fiscal policy that ensures to obtain free trade operations for the member countries through complying with certain economic policies and regulations. It is considerably recognized as a unification of fiscal, monetary along with counter-cyclic policies, which facilitates the member nations to independently perform their trade operations (European Commission, 2012). III. Overview of Economic Integration in the European Union The notion of economic integration performed by the EU can be considered as a major driving force behind the developments that have been observed in the region which has facilitated both the association as well as the included member nations. The process of incorporating economic development considerably plays a significant role especially for the member nations in terms of strengthening their economic position within the context of recent globalization (Dinan, 2005). In accordance with the present transformative phenomenon of the global nations, it is often observed that the countries seek to perform trade activities beyond the national boundaries, which is likely to create different trade barriers. In this regard, the major intention of integrating economic policies in the EU is to abolish different restraints concerning trade activities performed among the different countries (Losonc, 2007). At the time when the EU was founded during the year of 1958, the main purpose was to develop an effective custom union as well as a single market which can facilitate the global firms to produce goods and sell them into the common market (Murray, 2004). Subsequently, the purpose of the EU had also developed in the year 1993 with the unification of monetary as well as fiscal policies which has immensely enabled to develop the nations to perform their trade operations beyond their national boundaries. According to the present day context, the EU is on the fifth stage or place where it is highly focused on enhancing the efficiency of the monetary, fiscal as well as counter-cyclic policies which can facilitate the global countries to achieve substantial economic growth (European Commission, 2012). The most recent enlargement scenario of EU has been witnessed due to its effective integration of the economic policies. The facet of economic integration has also been found to be quite supportive in terms of enlarging and bringing greater economic prosperity to its member nations. In this regard, various achievements have been observed due to the unification of fiscal and monetary policies into the economic integration process (European Commission, 2009). A few of the major achievements have been represented in the following discussion. III. a. Achievements Fostered Trade Integration The economic integration process has enabled the member nations to experience a rapid trade integration through which the countries can independently perform their import and export trade activities with their neighboring countries. Moreover, the process also has fostered an efficient labor division as well as strengthened the competitiveness of the EU nations. The integration process has enlarged the GDP growth rate of the countries from 47% to 56% which has considerably been a major achievement of the economic integration process of the EU. The process has also strengthened the incorporation of the old member nations at a significant extent. Incorporation with the old member countries has also empowered the export trade activities of the new member countries. According to the export portfolio of both old and new member nations in the EU, it has been observed that almost 80% of total export of the new member countries was performed with the old member nations and 19.5% of export activities were conducted with the newly incorporated EU countries (European Commission, 2009). Fostering Social and Economic Cohesion The effective and continuous practice of economic integration has contributed largely as a supportive factor for the member nations in terms of growing their macroeconomic conditions. According to the statistical report of the EU, it has been recognized that proper economic integration has rapidly transformed the annual income, per capita along with overall economic growth of the countries. The per capita incomes of the newly incorporated member countries had increased to 40%, while it had witnessed around 52% of growth for the old member nations in the year 2008. The overall economic growth of the member countries has further been viewed to register robust growth of 5.5% between the years 2004 to 2008. Economic growth in the old member countries is also facilitated by the facet of economic integration, especially in certain nations which has enhanced their trade investments with the newly included EU nations. Therefore, it is ascertained that the economic integration has been rigorously performing a major role for both new and old member countries within the EU (European Commission, 2009). Improved Competitiveness and Employment Opportunities The increasing investment opportunities formed by the economic integration has helped the enterprises in the old member nations in order to reinforce their competitive position and employment opportunities as well. Economic integration has opened new industry and market opportunities for the enterprises in the member countries, which has facilitated them to independently perform their export and foreign investment activities. The process has offered significant opportunities for the member countries to enhance their efficiencies and competitiveness in the global business environment. Moreover, the workers in the newly incorporated member countries have also profited from better employment opportunities at domestic and international business environment. The labor markets in the newly included member countries have experienced dramatic changes in terms of achieving the opportunity of new jobs during the period of 2003 to 2007. In accordance with the statistical records, it is observed that the facet of economic integration and growing investments facilities generated by the developed countries have enabled to create 3 million new jobs in the newly included EU countries from the year 2003 to 2007. As a result, the overall employment rate in these countries has witnessed a rise of around 60% (European Commission, 2009). III. b. Evaluation It is recognized that there has been a staged transformation in the EU through an effective and widespread practice of the economic integration process. The integration process has been significantly developing the competitiveness of the member countries in various disciplines. However, in various scenarios, it has also been found that certain amount of economic segregation in various EU nations have occurred during the notion of economic integration. The integration process in the EU nations has undoubtedly performed a major role especially for the developed nations. In accordance with the statistical reports of the EU, it is frequently observed that the developed countries are highly benefited in terms of improving their trade activities than the other developing and underdeveloped member countries. The underdeveloped and developing countries are significantly segregated by the unification of the monetary as well as fiscal policies within the economic integration process (Hornok, 2010). The notion of economic integration can be evaluated especially in terms of three major attributes such as trading blocs, trade diversion as well as national sovereignty. Formation of Trading Blocs: The nature of economic integration has highly focused on abolishing the trade barriers through developing different trade policies and regulations. With this concern, the process tends to create more trade barriers against the non-member nations which insensitively create difficulties for certain member countries to perform their export or investment activities (Schad, 2011). Trade Diversion: The notion of economic integration can also create significant obstacles for the member countries as at times, it is observed that the trading activities is diverted from a non-member nation to an EU member nation in spite of the presence of inefficient cost structure (Schad, 2011). National Sovereignty: The aspect of economic integration can also cause to give up certain degree of control concerning the existing trade and monetary policies of the member countries. Moreover, the countries also face difficulties due to the higher amount of controls within the countries’ monetary, trade as well as fiscal policies due to the integration of economic integration (Schad, 2011). IV. Conclusion Economic integration within the EU nations has been acknowledged as a major factor which has enabled the member countries to independently perform their diverse range of trade activities. The process has been considered as one of the milestones of EU which has brought significant benefits to the entire continent of Europe and its member nations. In relation to the efficiencies of the economic integration process; fostering trade facilities, improving social and economic cohesion as well as developing competitiveness and employment opportunities are a few of the major achievements which have been witnessed throughout the discussion. Moreover, it has also contributed in terms of rendering its major support for abolishing different trade and monetary obstacles that can create hindrances upon the financial developments of the nations. However, it also tends to create certain challenges for the member countries in terms of creating trading blocs, national sovereignty as well as trade diversions. Therefore, it has been witnessed that despite the fact that economic integration has been the most concrete and visible achievement of the EU, it has caused certain difficulties especially for the underdeveloped or developing countries to a certain extent. References Bache, I. & et. al., 2011. Politics in the European Union. Oxford University Press. Dinan, D., 2005. Fifty Years of European Integration: A Remarkable Achievement. Fordham International Law Journal, Vol. 31, Iss. 5, pp. 1118-1142. European Commission, 2012. Economic and Monetary Union. What is Meant by ‘Economic Integration’? [Online] Available at: http://ec.europa.eu/economy_finance/euro/emu/ [Accessed April 19, 2013]. European Commission, 2009. Five Years of an Enlarged EU Economic Achievements and Challenges. European Economy. [Online] Available at: http://ec.europa.eu/economy_finance/publications/publication14078_en.pdf [Accessed April 19, 2013]. Holden, M., 2003. Stages of Economic Integration: From Autarky to Economic Union. Collection. [Online] Available at: http://publications.gc.ca/Collection-R/LoPBdP/inbrief/prb0249-e.htm [Accessed April 19, 2013]. Hornok, C., 2010. Trade-Enhancing EU Enlargement and the Resurgence of East-East Trade. Results. [Online] Available at: http://hfcs.at/de/img/feei_2010_q3_studies_hornok_tcm14-204836.pdf [Accessed April 19, 2013]. Jovanovic, M., 2002. International Economic Integration: Limits and Prospects. Routledge. Losonc, A., 2007. Susan Senior Nello: The European Union: Economics, Policies and History. PANOECONOMICUS, Vol. 1, pp. 119-122. Murray, P., 2004. Factors for Integration? Transnational Party Cooperation in the European Parliament 1952-79. Australian Journal of Politics and History, Vol. 50, pp. 103-116. Rodrigue, J. P., 2013. Levels of Economic Integration. Economic Integration. [Online] Available at: http://people.hofstra.edu/geotrans/eng/ch5en/conc5en/economicintegration.html [Accessed April 19, 2013]. Schad, M., 2011. Economic and Monetary Integration. Disadvantages of the Integration. [Online] Available at: http://www.uni-ulm.de/fileadmin/website_uni_ulm/mawi.inst.150/lehre/ss11/isp/Economic_and_Monetary_Integration.pdf [Accessed April 19, 2013]. Seller, W., 2007. Economic Integration in NAFTA and EU: A Comparative Analysis. GRIN Verlag. Read More