part i- european economy basics

8/2/2019 Part I- European Economy Basics

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EUROPEAN ECONOMY

Dr. Marielle GOTO

http://ec.europa.eu/avservices/download/photo_download_fr.cfm?id=140751



CONTENTS

• Part I- European Union basics

• Part II- European monetary Policy

• Part III- Policy mix

• Part IV- Enlargement

• Part V- European policies and firms

• Part VI-Presentations

Dr. Marielle GOTO



PART I- EUROPEAN UNION

BASICS

Dr. Marielle GOTO



Contents

• I. A quick glance at the European Union

•

II. Historical steps of the European integration

• III. European Institutions

• IV. European economic outlook

Dr. Marielle GOTO



I. A QUICK GLANCE AT THE EUROPEAN

UNION

• Continuing evolving process of integration andenlargement since the 1950’s

•

27 different countries at the moment (GDP, size,language, mainland, outermost regions…)

• Analysis of the economic strengthes and

weaknesses of the European Union

• A complex and ongoing process

Dr. Marielle GOTO



European Union Countries

Dr. Marielle GOTO



Some figures

500 million inhabitants

4.2 million km² (9.6 for China and the UnitedStates)

At the moment 27 countries

First GDP in the world (a quarter of it); 40% of the world trade

Dr. Marielle GOTO



ow r c s e compare othe rest

of the world?

EU China Japan Russia United States EU China Japan Russia United States

12 508

1 326

3 329

468

9819

25 100

4 400

27 800

12 200

38 700

Size of economy: 2008 gross domestic product

in billion of euros

Wealth per person: 2008 gross domestic product

per person



GDP per inhabitant: the spread of

wealth

L i t h u a n i a

2008 GDP per inhabitantIndex where the average of the 27 EU-countries is 100

271

137

135 123118

114

122117

115116107

101103

10095 94

9180 76 76

68 6372

61 5658

46 40

L u x e m b o u r g

I r e l a n d

N

e t h e r l a n d s

A u s t r i a

D e n m a r k

B e l g i u m

S w e d e n

F i n l a n d

G e r m a n y

F r a n c e

I t a l y

S p a i n

E U - 2 7

C y p r u s

G r e e c e

S l o v e n i a

M a l t a

P o r t u g a l

E s t o n i a

H u n g a r y

S l o v a k i a

L a t v i a

P o l a n d

R o m a n i a

B u l g a r i a

U n i t e d K i n g d o m

C z e c h

R e p u b l i c



GDP per Capita

Source: Eurostat



Dr. Marielle GOTO

Source: Eurostat



II-Historical steps of the European

integration

Dr. Marielle GOTO

60 years of history

A deepening integration

Complex and eventful process

Important enlargement (a fourfold rise in the

number of member countries in 60 years)





1950

• Speech of Robert SCHUMAN based on the ideas of Jean Monnet

• Proposal of a pool of coal and steel sources by France and Germany

1951

• Signature of the treaty establishing the European Coal and Steel Community(ECSC) by 6 countries: Belgium, the Federal Republic of Germany, France, Italy,Luxembourg and the Netherlands

1957

• The same six countries sign the treaties of Rome related to:

• the European Economic Community(EEC)

• the European Atomic Energy Community (Euratom)

1960

• the Stockholm Convention establishes the

• European Free Trade Association (EFTA) with countries outside the EEC like theUnited Kingdom, Iceland , Norway, Switzerland

1965

• Merger of the ECSC, EEC and Euratom

• Creation of a single Council and a single Commission.

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1968

• Establishment of a Common External Tariff (CET) and custom duties, betweenmember countries, are abolished on industrial goods

1973

• Denmark, Ireland and United Kingdom join the European communities. It is thefirst enlargement.

1979

• The first direct elections to the 410-seat European Parliament

1981 • Greece is the new member of the European Communities

1985

• The Schengen Agreement is signed in order to suppress checks at the bordersbetween member states of the European Communities (free movment of persons)

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1986 • Spain and Portugal join the European Communities club

1986 • The European Single Act is signed in Luxembourg and the Hague

1992

• The Treaty on European Union is signed at Maastricht.

• One of the aim is the creation of an economic and monetary union with a

single currency

1993 • The single market is implemented

1995• Austria, Finland and Sweden become part of the European Union

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Dr. Marielle GOTO

1997 • The Amsterdam Treaty is signed

1999

• The Euro is adopted by 11 countries and used on their financial markets fornon-cash transactions

• The European Central Bank (ECB) takes charge of the common monetary policyfor all th emembers of the European Monetary Union (EMU)

2001

• Signature of the Treaty of Nice

• The aim is to allow enlargement thanks to a change in the decison makingprocess

2002

• Euro-notes and coins are implemented in the Euro area. This area comprises 12countries: Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy,Luxembourg, Portugal, Spain and The Netherlands

2004 • Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland,

Slovakia and Slovenia join the European Union.



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2004

• The European Constitution is adopted in Rome but was to be ratified bymember states

2005

• Rejection of the European Constitutions by voters in France and the Netherlands as aresult of referendums

2007

• Bulgaria and Romania join the European Union

• Slovenia adopts the Euro

2007

• The Lisbon Treaty (a modifed version of the European Constitution) is signed

2008 • Malta and Cyprus adopt the Euro



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2009 • Slovakia adopts the Euro

2009

• The Lisbon Treaty has been implemented

2011 • Estonia has joined the Euro area

May 2010

•Greece has benefited from a financial assistance package of EUR110 billion

•Measures package of 750 billion € to create a safety net with the creation of the European

Financial Stability Facility (EFSF), the European Financial Stability Mechanism and

International Monetary Fund financing

21 July

2011

• New rules for the European Financial Stability Facility and new package bailout of 109billion € for Greece with the assistance of the private sector (banks)



A focus on European treaties

Dr. Marielle GOTO



Main European Treaties•

Treaty of Rome(1957):• Creation of a common market for goods and services

• Maastricht Treaty (1992):

• Creation of an economic and monetary union

• Implementation of convergence criteria to become amember of the monetary union

• Amsterdam Treaty (1997)

• New fiscal criteria commitments added to the convergencecriteria

• Technical treaty that renumbered articles from the EU andthe EC treaties

Dr. Marielle GOTO



• Treaty of Nice (2003):

• Preparation of the important enlargements of

2004 and 2007 with mostly countries for theEastern Europe

•

Lisbon Treaty (2007):• A strengthened role for the European parliament

• Qualified majority:

From 2014 a double majority: a decision is takenby 55% of the Member States representing at

least 65% of the Union’s population

Dr. Marielle GOTO



• The function of President of the European

Council is created. This president is elected for

2 and a half years. At the moment, Herman

Van Rompuy.

• A high representative of the Union for

Foreign Affairs and Security function is

created. At the moment, Catherine Ashton.

Dr. Marielle GOTO



III. European Institutions

• Regulation, recommandations and directives

are taken by the European Union institutions

• The EU institutions rules are modified by the

different treaties

• The three main institutions are the European

Council, the European Commission and the

European Parliament

Dr. Marielle GOTO



Difference between regulations, directives,

decisions, recommendations and opinions

•

To exercise the Union's competences, the institutions shall adoptregulations, directives, decisions, recommendations and opinions

• A regulation shall have general application. It shall be binding in itsentirety and directly applicable in all Member States

• A directive shall be binding, as to the result to be achieved, upon eachMember State to which it is addressed, but shall leave to the nationalauthorities the choice of form and methods

• A decision shall be binding in its entirety upon those to whom it isaddressed

• Recommendations and opinions shall have no binding force

Dr. Marielle GOTO



European Parliament

(direct election of the members)

The EU institutions

Court of Justice

Court of Auditors

Economic and SocialCommittee

Committee of the

Regions

Council of Ministers

(Council of theEuropean Union)

European

Commission (thecommon interest)

European Investment

Bank

European Central

BankAgencies

European Council

(Head of States)

Institutions



The Council of the European union

• Present presidency of the Council of theEuropean Union: Poland

• The high representative of the Union for

Foreign Affairs and Security is the permanentchairperson for the foreign affairs ministers’council

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Council of Ministers(Council of the

European Union)



How EU laws are made

Citizens, interest groups, experts: discuss, consult

Commission: makes formal proposal

Parliament and Council of Ministers: decide jointly

Commission and Court of Justice: monitor

implementation

National or local authorities: implement

How European Laws are established



IV. European Economic Outlook

• Before the crisis

• Different economic situations

• Different economic profiles

• From 2009

• GDP growth rates are not high enough to solve

sovereign debt issues• Labour market still weak with high

unemployment

Dr. Marielle GOTO



The differences among European

Union countries

• Difference in trade openness

• Difference in financial exposure

• Difference in competitiveness

• Questions of fiscal sustainability

• A rise in the countries differences

Dr. Marielle GOTO

l h



European GDP real growth rate 2000-2010

(%)

Dr. Marielle GOTO

Source: Eurostat



INFLATION RATE

Dr. Marielle GOTO



Inflation rate 2010

Dr. Marielle GOTOSource: Eurostat



Unemployment rate July 2011

Dr. Marielle GOTOSource: Eurostat



Conclusion

• A long, ongoing and complex history of

economic integration

• European integration is mostly a political

process

• Increasing economic differences with the

successive enlargements

• The rules of the monetary integration process

are put to the test since the 2008 global crisis

Dr. Marielle GOTO



Additional references

• Benassy-Quere A., Coeure B., Jacquet P. and Pisani-Ferry J.,2004, Politique économique, de boeck

• El-Agraa A.,2001, The European Union Economics and policies, Financial Times, Prentice Hall

•

Hallwood C.& MacDonald R., 2000, International Money and Finance, Blackwell publishers

• Henning C., 1998, «Systemic conflict and regionalmonetary integration: the case of Europe », in International organization, vol.52, n°3, Cambridge University Press

•

Mongelli F., 2008, « European Economic and Monetaryintegration and the Optimum Currency Area », EuropeanEconomy n°302

Dr Marielle GOTO

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