The European Union was created in 1958 providing inter regional trade barriers, a common external tariff against other countries, a Common Agricultural Policy and guarantees of free movement of labor and capital. The EU is formerly called the European Community, and became known as the EU in January of 1994. The EU currently consist of 15 countries (Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, UK) that all have adopted the same currency known as the Euro. The near future of the EU shows expansion by adding countries from Southern and Eastern European Countries. The advantages and disadvantages of joining the EU are very interesting, and seem to benefit countries more than harm most of them. The first advantage of joining the EU would is that each member has their own financial’s systems, but share the same currency, the Euro.
With a single currency price comparisons do not exists, resulting in fewer market segmentation (Tablas, Benefits and Costs of Entering the Eurozone).
A single currency allows for buyers to engage “comparison shopping” which may produce one disadvantage, more competition. Another advantage of a single currency is the more widely a currency is used, the more useful it becomes in trade because often having different currencies can act as a barrier in trade. With more trade options for countries there may also come some other obstacles, but as a result of more trade, usually comes better economies.
The Essay on Countries trade products
In the world market, countries trade products they wouldn’t be able to produce on their own. Countries like Cuba specializes in cigar production, Japan in electronics, and Russia in rocket technology. However, even if a country has an absolute advantage in producing all goods, they still will benefit from trade. Many economic factors are involved with trade. Among the major factors are ...
In such economies as Greece, Spain, and Portugal improvements of macroeconomic conditions and emerging new markets have changed the patterns and behaviors of the business communities, as interest rates for investment loans declined enormously and new markets for capital became available (Bartzokas, Investing in Southern Europe).
Finally for the members of the EU the fear of recession usually exists, but the Maastricht Treaty provides these countries with a safety net. Members often free that they be unable to devalue in order to boost exports, to borrow more to boost job creation or to cut taxes when they see fit, because of the other countries that a part of the EU, but the Maastricht theory allows for aid packages for euro members whose economy has run into financial troubles. As for the other side of entering the EU come some disadvantages to citizen’s lives personally, and their business lives. The first disadvantage is that interest rates are standard throughout the EU, which by some is viewed as an advantage. But for example if the UK economy is currently growing reasonably well, while Germany is having problems economically, the policy of a single interest rate will prevent the EU from setting the rates at the appropriate for each country.
The only way a country like Germany could have a independent interest rate would be if had a free floating currency such as England does; the pound. Also by setting a standard interest rates, some of flocculating rates outside of the EU can be lower, causing loss of monies in trade. Another disadvantage that comes with a membership in the European Union is the language difficulties, and ethical backgrounds. Experts suggest that such unions can only be successful if the whole area is covered by a single currency and has the same legal framework, as in the United States where a common language and laws consists in a large geographical area. This is not the case in these 15 separate countries that are governed with similar laws, but many different languages are spoken. The final few disadvantages are the loss of sovereignty, cost and higher unemployment.
The Essay on Semi Government Bonds Interest Members
Question One (a) Definitions Term Deposits: Similar to a Guaranteed Investment Certificate (GIC), term deposits pay a slightly lower interest rate, as they may be redeemed at any time. Credit Union: a cooperative group that makes loans to its members at low rates of interest. Also called cooperative credit union. Building Society: A financial institution owned by its members (further than by share ...
Loss of sovereignty is considered an issue, because politicians fear that the introduction of a single currency could eventually lead to the end of a nation state. The cost of entering the EU is a big reason why the EU only currently consists of fifteen countries. The British Retailing Consortium estimates that British retailers will have to pay between 1. 7 billion and 3. 5 billion to make the necessary changes (Bartzokas).
Finally, with the addition of more competitive and bigger markets, comes lower production of goods, and increased unemployment rates.
Also with the higher unemployment rates comes less money to handle wage competition. In such countries as Spain and Portugal many economic and political consequences were made to obtain a EU membership. Though political consequences have not really occurred as Portuguese and Spaniards declare themselves satisfied with the functioning of democracy. Yet, political cynicism continues to be a major component of political attitudes and the political behavior of Portuguese and Spanish citizens. These countries still have the lowest levels of participation of Western Europe and membership in political and civic associations remains very low. At the same time, citizens do not have a feeling of political influence and express very little interest in politics.
Both of these countries have also encountered economic falls since before entering the EU, and continued after entering. Though both countries problems existed before entering the EU, they have been provided with the proper financial aids, and tools to fix their countries economic problems. The future of the EU is preparing for expansion, and their disadvantage may have just begun. With the enlargements to come existing member will be facing significant potential costs due to these enlargements. Such costs are costs for public finances, costs of labor market disruption and the costs of wage competition. The Future of the EU may not be as healthy as its past for existing and new coming members..
