European Union: Case Study
Expense of Joining
To join the EU certain criteria must be met ie. high environmental protection standards a lot of investment may be needed to meet the standards
Trade Creation
Trade Creation means economic integration results in high-cost domestic producers being replaced by low-cost imports from efficient partner countries, consumers will see a price reduction
Reason why their growing?
Trade in Engine of Growth - Thus Living Standards Social improves Development
Loss of Resources
UK has to share traditional fishing ground this may damage this economic sector
Trade Diversion - also trade creation problem
occurs where lower cost external producers ie. NZ lamb is replaced by higher cost EU producers, increasing prices also Domestic job losses may be large if there is Trade creation. particularly true if large and structural (occu/geo immobile) unemployment is caused
Climate Action - 2 examples
Greenhouse gas emissions falling by 19% since 1990 while the EU economy grew by 45%. Renewable and energy efficiency 2020 targets are also within reach.
2 examples of Complexity of EU
Hard to adopt policies that suit all Hard to benefit every industry
EU 3 Social benefits
Increased Security Free Movement Subsidary Support
FDI
Firms outside the intergration area invest in new plants in member countries so they are able to produce output that avoids external tariff, increasing productive potential ie. Nissan, Japan built a factory in Sunderland, one of the most-effcient car producers in the world and they can export into EU market avoiding tariff barriers
5 Examples of Groupings
Free Trade Areas ie. NAFTA - No Internal Trade Barriers Customs Union - Mercosur + Common External Tariff Single Common Market + Factor and Asset Mobility Monetary Union - Euro + Common Currency Full Economic Union + Common Policy
3 Examples of integration in EU
Goods, Services, Money and People can freely move between states without barriers 17/28 Have a single currency - Euro Common laws + Policies ie. Common Agricultural policy + Common Fisheries Policy
80's-90's: Examples
Greece Spain Sweden
Political Benefit
Joining the EU gives countries a better platform to air their international concerns. Since member countries work together in dealing with important issues, it is likely that the international community will pay attention to the EU voice.
3 Social Reasons for Groupings
Legal Framworks, Employment Conditions (time and wages) Anti-Discrimination Law
5 Negatives of EU
Expense of Joining Trade Diversion Brain Drain Conflicting Policies Loss of Resources
3 Economic Pros of EU
FDI Price Transparency Trade Creation
When did UK join? + 2 others that year
1973 with Ireland and Denmark
How Many Countries?
28
2 Environmental Benefits
Air Quality Climate Action
1957 Original 6
Belgium France West Germany Italy Luxemberg Netherlands
2007
Bulgaria Romania
Groupings of Nations
Countries seeking to further their economic development have sought alliances to promote Cross-border trade also provides other benefits
2004
Cyprus Czech Republic Estonia Hungry Latvia Lithuania Malta Poland Slovakia Slovenia
Conflicting Policies
ECB sets IR which don't benefit all members
Air Quality
EU air quality legislation has meant the air we breathe today is better vs past decades
Free Movement
EU members are free to live and work where ever they like
Increased Security
EU-Counter Terrorism Policy - protects all member states from the threat of terrosim by introducing biometric passports to increase border security ie. Paris attackers caught in Belgium
Subsidary Support
Policies such as Common Agricultural Policy Protectionism - Subsidy - Tariff + Quota on agricultural produce EU farmers sell more thus more income increases their standard of living
3 issues for Future
Rise of Alt governments ie. Brexit Future impacts from ECB Migration
Brain Drain
Skilled workers emigrate East EU for West
Price Transparency
Where EU is adopted firms can easier compare prices helping to source cheap resources this encourages Cross-border trade increasing competition competition lowers prices, monopoly power and increases innovation
EU: Why?
help Europe recover after WW2 aimed to improve economic development by improving integration between nations