Transcript Document

Economic History of
Integration – General Points
 Economic “Stuff” at the Core of
Integration
 Definitions and Theories
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Hierarchy of Degrees of “Union”
Static - Dynamic, Creation - Diversion
 Context
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Types of European Postwar Economies
Cycles of Postwar Economic Change
 Stages and Timelines
Definitions of Integration
 Hierarchy of “Union”
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Free-trade area
Customs union (CET)
Common market
Economic union
Monetary union
Economic and monetary union
Political/Full union
Definitions (cont’d)
 Another way of “reading” Union
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Market integration
 Of
“goods and services”
 Of “factors of production” (labor, capital)
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Policy integration
 Coordination
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of economic policy
Related to Common Market: competition,
regulation, industrial structure
“Macro-economic” and monetary policy
Re-distribution and other social policies
 Fixed
currency linkage, or single currency
Theories of Integration
 Classic liberal theories of international trade – “freer trade
is in everyone’s interest” (comparative advantage)
 Static effects (“today-tomorrow”)
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More trade
More goods Lower prices
More “Welfare”
 Dynamic or “Restructuring” Effects (“over time”)
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Competition and Efficiency – Allocation of Resources
Economies of Scale
 Potential “Downside”
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Trade Diversion vs. Trade Creation
Need for a “balance sheet” of effects
 The Integration Process as a Whole
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Neofunctionalism and “spillover”
The Economic Historical
Context of Integration
 New Breed of Postwar European Economies
 Growth economies: export-led growth
 Government-intervention economies
 Full-employment goal as priority
 Welfare state
 Nationalizations (Britain, France): “public sector
economy”
 Implications
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Huge government budgets
National economic policy
 Break with the Past
 France: Modernization, Agriculture to Industry
 Britain: De-regulation and Privatization (Thatcher)
The Economic Historical
Context (cont’d)
 Economic Cycles and Turning Points
 Reconstruction and Recovery (1946-52)
 Long period of dynamic growth (1952-73)
 Crisis, stagnation and inflation (1973-83)
 Renewed growth (1984-1990)
 Momentary recession and recovery (1990-93)
 Key turning points: 1952-58, 1973, 1983-5
 Main themes
 Dynamic growth of world trade
 Global currency regime changes (1972 key date)
 Recurring problem of unemployment
The Elements of Economy
 International trade
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Restrictions: tariffs, quotas, non-tariff barriers (NTBs)
Balance of payments (exports and imports component)
 Government and the economy
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Budget: taxes and expenditures
Monetary policy: interest rates
Regulation
 Currency value
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Relation to balance of payments (hence trade)
The “good” and the “bad” of a “strong currency”
Restrictions and their removal (currency convertibility)
Fixed vs. variable “exchange rates”
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Bretton Woods (1944 -1972)
Reserve currency, cornerstone currency: $
The Course of Economic
Integration
 Role of the Treaties
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Establish goals and priorities
Provide mechanisms for achieving goals –
concrete, pointed, precise, or vague
Articulate timelines and deadlines
 Initial achievements of the EEC
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Customs union (1968)
Common Agricultural Policy (by 1970)
Kennedy Round of GATT – one voice (1963-67)
The Course of Economic
Integration (cont’d-1)
 Period of “Eurosclerosis” (1973 – early
1980’s)
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Stagnant economies: unemployment as a
leading concern, along with inflation
Proliferation of NTBs
One exception: 1979 Cassis de Dijon
Court of Justice decision
 “Mutual
Recognition”
The Course (cont’d-2)
 Breakthrough and renewal, 1985-1992
 A new approach to removing barriers – the White
Paper of Lord Cockfield (1985): Internal Market
 “Spillover”: from Single Market to Single Currency
 Grand implications of “the 4 freedoms”: from
economic to political union
 The tortuous history of monetary union
 The “snake in the tunnel” (1972-4)
 EMS, ERM, and the ‘ecu’ (1979)
 Maastricht and EMU in 3 stages with deadlines
(timeline): the “euro” by March 2002
 European Central Bank
The Course (cont’d-3)
 EEC/EU and Global Trade
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The “rounds” of GATT (1950-95)
The special relationships
 With
West European non-members (EFTA)
 With 70 “Associated States” (sub-Saharan
Africa mainly)
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WTO (1995 – present)
Record of Some
Achievements
 Trade in Goods
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1958-72: intra-EEC trade grows more
rapidly than trade with other countries
1972-85: less dynamic intra-EEC trade;
trade with third countries greater among
“the Six” 1972-78 (oil imports)
1985-95: intra-EU trade grows very rapidly
Germany is the largest trade partner, both
as importer and exporter of other EU
goods
Achievements (cont’d)
 CAP
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A very complex program that is less “free
trade” than “managed trade”
A balance of political interests
By a system of levies, creates:
 Funds
to distribute to eligible regions
(supposedly for improving production, but in
fact to support farm interests)
 A European Community Budget
Websites
http://img.uoregon.edu/euro410/
Europa
Commission DGs
Curia