European Union Economics Patricia Nouveau 2012 - 2013.

European Union EconomicsEuropean Union Economics

Patricia NouveauPatricia Nouveau

2012 - 20132012 - 2013

General informationGeneral information

1. My details: 1. My details: [email protected]; ; [email protected]@ephec.be

2. Objectives of the lecture: 2. Objectives of the lecture: Introduction to macroeconomic analysis (at European Union level);Introduction to macroeconomic analysis (at European Union level); Basic knowledge of European economic environment and general EU policy-Basic knowledge of European economic environment and general EU policy-

making.making.

3. Overall structure of the lecture:3. Overall structure of the lecture: Part OnePart One:: The historical process of Economic Integration in Europe; The historical process of Economic Integration in Europe; Part TwoPart Two: The Economic and Monetary Union;: The Economic and Monetary Union; Part ThreePart Three: Social and Economic Cohesion within the EU.: Social and Economic Cohesion within the EU.

4. Examination: 4. Examination: Oral examination – 3 questions;Oral examination – 3 questions; Thirty minutes to prepare / fifteen minutes to present.Thirty minutes to prepare / fifteen minutes to present.

5. ENGLISH: how to take advantage of a lecture taught in English? 5. ENGLISH: how to take advantage of a lecture taught in English?

Back up materialBack up material 1. Material1. Material Slideshow: (Slideshow: (≠ syllabus): ≠ syllabus): Giving structure and main information Giving structure and main information Lecturer’s oral presentationLecturer’s oral presentation

2. Student responsibility: Taking notes & review last week’s slides and notes2. Student responsibility: Taking notes & review last week’s slides and notes

3. Sources and readings:3. Sources and readings: Ivan T.Berend, Histoire économique de l’Europe du XXe siècle, Eds De Ivan T.Berend, Histoire économique de l’Europe du XXe siècle, Eds De

Boeck Université, 2008;Boeck Université, 2008; Origins and Evolution of The European Union, Eds Desmond Dinan, Oxford Origins and Evolution of The European Union, Eds Desmond Dinan, Oxford

University Press, 2006;University Press, 2006; H. Wallace, W. Wallace & M.A. Pollack, Policy-Making in the European H. Wallace, W. Wallace & M.A. Pollack, Policy-Making in the European

Union, Oxford University Press, 2005;Union, Oxford University Press, 2005; Ali M. El-Agraa, The European Union, Cambridge University Press, 2007;Ali M. El-Agraa, The European Union, Cambridge University Press, 2007; Jacques Ziller, Les Notices, Edition Traité de Lisbonne, La Documentation Jacques Ziller, Les Notices, Edition Traité de Lisbonne, La Documentation

Française, 2008;Française, 2008; Agnès Bénassy-Quéré/Benoît Coeuré, Economie de l’Euro, La découverte, Agnès Bénassy-Quéré/Benoît Coeuré, Economie de l’Euro, La découverte,

Paris, 2010; Paris, 2010; Patrick Artus, La crise de l’Euro, Armand Colin, 2012;Patrick Artus, La crise de l’Euro, Armand Colin, 2012; Paul De Grauwe, economics of Monetary Union, Oxford, 2012. Paul De Grauwe, economics of Monetary Union, Oxford, 2012.

6.616.61

8.148.14

10.2410.24

Some rules of disciplineSome rules of discipline

• No delay;No delay;

• No nap;No nap;

• No chattering;No chattering;

• No net surfing; No net surfing;

• No cell phone switched on; No cell phone switched on;

• Questions and interactivity are most welcome ! !Questions and interactivity are most welcome ! !

Chapter One:Chapter One:

The historical process of The historical process of Economic IntegrationEconomic Integration

in Europe in Europe

1.1. Introduction: what do we call economic integration?Introduction: what do we call economic integration?2.2. The origin of the American economic supremacyThe origin of the American economic supremacy3.3. The European reactions 1900-1945The European reactions 1900-19454.4. The American support for during the launching of the European constructionThe American support for during the launching of the European construction5.5. The launching of the Common MarketThe launching of the Common Market6.6. The national champions strategy and the slowdown of European integrationThe national champions strategy and the slowdown of European integration7.7. The acceleration of European integration and the removal of intra-European NTBs The acceleration of European integration and the removal of intra-European NTBs

1980-20011980-20018.8. The wave of M&A 1986-2001 and its consequencesThe wave of M&A 1986-2001 and its consequences9.9. The renewal of the US competition and the European reaction 1995-2007The renewal of the US competition and the European reaction 1995-200710.10. ConclusionsConclusions

Introduction: what is economic integration?Introduction: what is economic integration?

1. Attempt of definition:1. Attempt of definition:

To be distinguished from political integration:To be distinguished from political integration:

• Political centralisation: from several political centres towards one single Political centralisation: from several political centres towards one single political centre;political centre;

• French political integration: from small dukedoms (Burgundy, Brittany, French political integration: from small dukedoms (Burgundy, Brittany, Normandy, Aquitaine) to the Kingdom of France (From 12th century to Normandy, Aquitaine) to the Kingdom of France (From 12th century to 17th century);17th century);

• German Unification: 36 Central European States (Kingdom of Prussia, German Unification: 36 Central European States (Kingdom of Prussia, of Bavaria, etc, free cities of Bremen, Hamburg or Lübeck, etc) unite as of Bavaria, etc, free cities of Bremen, Hamburg or Lübeck, etc) unite as the German confederation (1815) towards complete unification in 1870;the German confederation (1815) towards complete unification in 1870;

• Leads to an unified territory under one single government and Leads to an unified territory under one single government and centralised institutions.centralised institutions.


Economic integration concerns:Economic integration concerns:

• Elimination of various obstacles preventing the free circulation of Elimination of various obstacles preventing the free circulation of goods, services and production factors (labour and capital) on a territory goods, services and production factors (labour and capital) on a territory (within a region, between various regions, etc);(within a region, between various regions, etc);

• The disappearance of all barriers turns separate economies into more The disappearance of all barriers turns separate economies into more interdependent economies. Can go as far as a unified market;interdependent economies. Can go as far as a unified market;

• What are the obstacles to an integrated market:What are the obstacles to an integrated market: Geographical obstacles;Geographical obstacles; Technological obstacles;Technological obstacles; Institutional obstacles;Institutional obstacles; Cultural obstacles.Cultural obstacles.


Geographical obstacles:Geographical obstacles:

• Physical barriers Physical barriers The Alps mountains separating Western Europe from Central and The Alps mountains separating Western Europe from Central and

Eastern Europe: few communication paths and many bottlenecks;Eastern Europe: few communication paths and many bottlenecks; Climate: Siberian permafrost - an obstacle between Western Russia Climate: Siberian permafrost - an obstacle between Western Russia

and Far-Eastern Russia;and Far-Eastern Russia; Insular position of some areas;Insular position of some areas;

• Distance between economic centresDistance between economic centres Long-lasting travels for merchants in the past;Long-lasting travels for merchants in the past; Problems of security (for goods and cash transported);Problems of security (for goods and cash transported); Transportation improvements reduce distance.Transportation improvements reduce distance.

Geographical obstacles in EuropeGeographical obstacles in Europe

Key market hubs in Middle Age EuropeKey market hubs in Middle Age Europe


Technological obstacles:Technological obstacles:

• Transportation barriers:Transportation barriers: Today from Brussels to Seville, two days by truck whereas from Mumbai Today from Brussels to Seville, two days by truck whereas from Mumbai

to Calcutta (same distance), 11 days by truck;to Calcutta (same distance), 11 days by truck; Progress in transport enables further economic integration:Progress in transport enables further economic integration:

• Railways, air travel, maritime transport, etc;Railways, air travel, maritime transport, etc;

• Developments of routes, motorways, navigable channels, etc;Developments of routes, motorways, navigable channels, etc;

• Logistics impediments: Logistics impediments: Revolution of containerisation in the 1970s;Revolution of containerisation in the 1970s;

• Communication barriers:Communication barriers: Progress in communications is also key to an more integrated market;Progress in communications is also key to an more integrated market; Post networks; Post networks; Power use and development of communications: telegraph, telephone;Power use and development of communications: telegraph, telephone; IT development: Internet.IT development: Internet.


Institutional obstacles:Institutional obstacles:

• Customs dutiesCustoms duties Numerous tolls between localities in the past;Numerous tolls between localities in the past; Tolls between provinces and sometimes localities in China today;Tolls between provinces and sometimes localities in China today;

• Technical barriers:Technical barriers: Standards, weights and norms;Standards, weights and norms; Differences in railway gauge tracks between two areas;Differences in railway gauge tracks between two areas; Differences in electricity standards: plugs, cables, etc…Differences in electricity standards: plugs, cables, etc…

• Legal barriers:Legal barriers: Labour rules & regulation of migratory flows: Labour rules & regulation of migratory flows:

• No peasants in the cities in the Middle Ages;No peasants in the cities in the Middle Ages;• Slavery in the United States;Slavery in the United States;• Chinese “Hukou” or permit of residence;Chinese “Hukou” or permit of residence;

Coexistence of several currencies and means of payments.Coexistence of several currencies and means of payments.


Cultural barriers: Cultural barriers:

• LanguageLanguage

• Education systems;Education systems;

• Religion, beliefs;Religion, beliefs;

• Self-perception of the world;Self-perception of the world;

• → → Jules Ferry laws in France Jules Ferry laws in France

(1881-82), establishing (1881-82), establishing

mandatory education mandatory education

in French for primary levelin French for primary level


2. Expected theoretical outcomes of economic integration:2. Expected theoretical outcomes of economic integration:

Economic convergence through:Economic convergence through:

• Catching up process between lagging regions and more advanced Catching up process between lagging regions and more advanced areas;areas;

• Equalisation of productivity levels; Equalisation of productivity levels;

• Equalisation of wages and prices;Equalisation of wages and prices;

Further growth & competitiveness:Further growth & competitiveness:

• Increased production levels due to increased market size:Increased production levels due to increased market size: Increase fiscal revenues for the state;Increase fiscal revenues for the state; Improved international bargaining position for companies;Improved international bargaining position for companies;

• Enforced changes in efficiency brought about by intensified Enforced changes in efficiency brought about by intensified competition between firms.competition between firms.


3. Regional economic integration: the usual steps3. Regional economic integration: the usual steps

Free trade area (FTA):Free trade area (FTA): member nations remove all trade impediments among member nations remove all trade impediments among themselves but retain their freedom to determine their own policies vis-à-vis themselves but retain their freedom to determine their own policies vis-à-vis the outside world (current NAFTA);the outside world (current NAFTA);

Customs UnionCustoms Union: member nations must conduct and pursue common external : member nations must conduct and pursue common external commercial relations: German Zollverein in 1830s (see following map);commercial relations: German Zollverein in 1830s (see following map);

Common marketCommon market: free factor mobility across national members’ frontiers : free factor mobility across national members’ frontiers (capital, labour, technology and enterprises should move unhindered (capital, labour, technology and enterprises should move unhindered between member states;between member states;

Economic and monetary union: unification of monetary and fiscal policies. : unification of monetary and fiscal policies. Setting up of a central authority to exercise control over these matters Setting up of a central authority to exercise control over these matters (German unification, Sterling area);(German unification, Sterling area);

Complete political integration: the participating countries become literally : the participating countries become literally one nation.one nation.


One example of Customs Union:

The German confederation in 1815 and the implementation of the Zollverein in 1834

European Union Economics Patricia Nouveau 2012 - 2013.

Documents

Transcript of European Union Economics Patricia Nouveau 2012 - 2013.