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Essay Subject: Analysis & overview of the past & current economic fortunes of the European economic union. Concludes with description of outlook for the future.... More...

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Paper Abstract: Analysis & overview of the past & current economic fortunes of the European economic union. Concludes with description of outlook for the future. Paper Introduction: Introduction Over 37 years have passed since the European Community (EC) was created under the Treaty of Rome. During this period of time the economy of Europe has gone through alternating periods of growth and stagnation as well as trade liberalization and protectionism (Pelkmans and Winters, 1988). Today the European Union (EU) consists of 15 member states: Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, the United Kingdom Austria, Sweden and Finland. These economies, during the past 10 years, experienced relatively strong growth in the first half of the 1980s, when the Single Market program stimulated a surge in investment, and much slower growth during the 1990s. The analysis which follows will first present some basic Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. Government deficits reached an average of 6percent of GDP (including a high of 15.5% in Greece), while across the EUgross public debt hit a record 66 percent of GDP. IMF paints bleak picture of Europeaneconomy. Krugman (1996) presents some evidence for the accuracy of such ananalysis. Bibliography Baldwin, R. could not seem to push its unemployment rate down to European levels.But over the course of the 197 s European unemployment rates began asustained upward march. In mostEuropean countries unemployed workers are assured of a minimal income, nomatter how long it has been since they last worked. In the 196 s, European unemployment rates were consistently lower thanthose in the U.S. However if these steps fail to begin to resolve the unemployment problemin Europe than bigger economic turmoil may be on the horizon. The near future may see reduced unemploymentbenefits with tighter eligibility criteria and shorter duration, lowerpayroll taxes, particularly for low-wage workers, some minimum wage cutsand changes in the way governments handle collective bargaining agreements. The European Community Commission published a white paper on"Completing the Internal Market" in June of 1985. These developments ledEuropean leaders to adopt a number of growth-oriented programs, includingthe Edinburgh Growth Initiative of December 1992 and the Delors "WhitePaper on Growth, Competitiveness and Employment" of December 1993 (Miller,1996). Workers and economists. Yetprospects for a period of accelerating growth were tempered due to currencyupheavals within the Union. The growth effect of 1992. However the IMF also maintains that inthe medium term European countries need to put their public finances inorder which they believe will require reining in spending in suchpolitically explosive areas as pensions and unemployment benefits. During thatperiod of time the later stages of a broad business cycle recovery weremarked by a noticeable increase in inflation, despite the fact that theunemployment rate was still nearly 9 percent. Howeverin the 199 s unemployment began rising again and a type of Eurosclerosisonce again seems to have set in. The IMF worries that therecovery in Europe may be weaker than projected because it may byrestrained by the short-term contractionary effects of fiscal consolidationefforts being implemented in most EU countries partly to satisfy theMaastrich criteria by 1997. In 1993 it was 11%. Paradoxically, if growth is held back by thedrive to slash budget deficits, that will make the Maastricht criteria thatmuch more difficult. Stagnation had reducedEuropean competitiveness in the 197 s and the increasing inability of theEuropean Community to function effectively and resolve problems led membergovernments to conclude that increased cooperation would be necessary toincrease economic efficiency and competitiveness (Calingaert, 1988). Hoover's handbook of world business (1995). In terms of the distribution of economic activity, Germany has by farthe largest economy, accounting for 29% of the EU's GDP, followed by France(18%), Italy (13%), and the United Kingdom (13 percent). According to Paul Krugman (1996), in the early 198 s the problem ofEuropean unemployment became an obsession with many European economists.They began to argue that high European unemployment was the unintendedbyproduct of the European welfare state, which reduced the incentives bothfor firms to offer jobs and for workers to accept them. Suchsteps are now beginning to be taken among EU member states like Italy,Germany and France. (1989). It will then discuss the alternating periods ofstagnation and growth over the past 1 years in Europe. Thus no matter what the European Union does European labor markets maybe in for dramatic changes. Finally, it willfocus more directly on the structural problem of unemployment. (1988). The decline in Europe's economic fortunes reversed somewhat in 1994due to a strong pick-up in the world economy, a marked easing of monetaryconditions within the Union, and higher productivity, competitiveness andprofitability resulting from business firms adjustment efforts. (1996 July 1). Krugman, P. Demand had recovered, but hebelieves that unemployment could not fall below the nine-percent structuralrate without triggering inflation. 25). Initially Europe did experiences an expansion in private investmentbut the economy of the European Union began to slow considerably in 1991and 1992, growing only 1.4% and 1.1% during those two years. The end result of such a diagnosis is a situation in which taxes andregulation discourage firms from offering jobs and subsidies and incomesupports discourage workers from accepting them. He states that the structural nature of Europe's unemploymentwas dramatically demonstrated by the events of the late 198 s. Stagnationturned into recession in 1993, when GDP declined by .3%, only the secondsuch downturn in the EU's history. It presented a specific time-table for implementing some 3 separate measure or directive that were toabolish all physical, technical and fiscal barriers to trade by December31, 1992. Miller, R. In other words this situation does notappear cyclical because in such a case economic problems are caused byinadequate demand and can be cured by adopting a more expansionary monetaryand fiscal policy--that is by spending more or taxing less. Slower growth tends to bloat budget deficits bypushing up government spending on unemployment and other benefits anddepressing tax revenues from economic activity (Miller, 1996).Unemployment: Before and After EU In Europe, despite the 1992 program and the European Union,unemployment has continued to rise. and Winters, A. Pelkmans, J. It was hoped that such a program would lead to an increase ingrowth and private investment in Europe (Baldwin, 1989). The result is that anunemployed European does not need to search for employment with thedesperation of his American counterpart. At that time nearly half of the joblessEuropeans had been without work for at least a year, and many formed aclass of the more or less permanently unemployed (Krugman, 1996). Among the countries now making up theEuropean Union, the average unemployment rate in 197 was less than 3percent. Krugman (1996) also points out thatadded to these straightforward disincentives to job creation are moresubtle ones. Admittedly a brief periodof optimism about the unemployment problem did emerge in the late 198 s ashopes for gains for close European integration helped fuel a business cyclerecovery that led to a modest fall in European unemployment rates. Austin, Texas: TheReference Text. The 1992 challenge from Europe. He states that it is typically very difficult and costly forEuropean firms to fire workers. There couldbe more general political attacks of the idea of European Monetary Unionas well as a common currency. So in an uncertain world, Europeancompanies are understandably reluctant to hire workers in the first place.Furthermore powerful European unions are also more able than their Americancounterparts to sustain wages in the face of potential competition from theunemployed. A period of slower growth followed in 1995, atonly 2.4 percent (Miller, 1996). These economies, during the past 1 years, experienced relativelystrong growth in the first half of the 198 s, when the Single Marketprogram stimulated a surge in investment, and much slower growth during the199 s. WashingtonD.C.: National Planning Association. The International Monetary Fund has generally painted a bleak pictureof Europe, as a region plagued by sky-high unemployment and boxed in by itsdrive to launch a single currency in 1998 (Miller, 1996). (Hoover,1995) The overall size of the EU economy in 1995, including the three newmember states that joined the Union on January 1, 1995 was $7.1 trillion.Private consumption accounts for 63% of the EU's Gross Domestic Product,while gross fixed capital formation contributes 2 .3 percent and governmentconsumption adds an additional 17 percent (Hoover, 1995). This process appeared to work in the following manner. European Policy, 9, 247-283. Foreign Affairs, 64-83. Meanwhile, all benefits are paidfor by a system of contributions from employers that considerably raisesthe cost of providing employment. (1988). Introduction Over 37 years have passed since the European Community (EC) wascreated under the Treaty of Rome. The analysis which follows will first present some basic statistics onthe Economic Union. (1996 Sept. The Maastricht treaty (the foundation document for the European Union)sets out tough budget guidelines that EU countries must meet in 1997 forentry into European Monetary Union in 1999. The International Monetary Fund estimates that as much as eight tonine percent of the European Union's current unemployment rate of over 11percent is structural in the sense that it is unlikely that it could beabsorbed through cyclical recovery alone (Miller, 1996). Per capita incomefor the EU as a whole is about $21,748, ranging from over 18 percent ofthe average in Luxembourg to less than 7 percent in Spain, Greece andPortugal (Hoover, 1995).Stagnation, Growth and the Economic Union As stated in the introduction, in the first half of the 198 s, priorto the single-market program, the economies of the soon to be EconomicUnion countries experienced a surge in investment. Reuters Newsline. In the short-runthe IMF sees some better times ahead for Europe, estimating that growthwill average 2.5% in 1997 up from approximately 1.6 percent in 1996.However, the IMF also believes that its economic projections could provetoo optimistic, especially if Europe's drive to cut budget deficits underthe Maastricht Treaty acts as more of a drag on growth than expected(Miller, 1996). This paper was adetailed plan for the removal of most obstacles to the free movements ofgoods, people, services and capital by 1992. In fact the number of unemployed in what is nowthe European Union rose every year between 1974 and 1985 (Krugman, 1996). Howeverstructural problems cannot be solved in this way.Outlook for the Future Organizations like the IMF are now arguing that in the short-run itwould prefer European nations to temporarily allow their budget deficits torise in line with the weakness of their economies rather than cut them tomeet the tough Maastricht criteria. During this period of time the economyof Europe has gone through alternating periods of growth and stagnation aswell as trade liberalization and protectionism (Pelkmans and Winters,1988). Calls for greater monetary leniency andgreater fiscal spending could overwhelm any further designs for EconomicUnion. Europe's domestic model, London:Royal Institute of International Affairs. Calingaert, M. The problemwas in existence prior to the formation of the Economic Union and continuesto be of significant concern today.The Economic Union The European Union of 15 member states has a population of about 37 million, concentrated largely in Germany (81.5 million, or 23%) Italy, theUnited Kingdom, and France (each with approximately 58 million people).While the population is about one and a half that of the Unite States, itis squeezed into an area about one-third of the size of the U.S. Today the European Union (EU) consists of 15 member states:Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, theNetherlands, Portugal, Spain, the United Kingdom Austria, Sweden andFinland. Employment fell by a record 2.4 millionduring the year, as the unemployment rate jumped 1.1% to 1 .6 percent ofthe civilian labor force. Indeed, American labor economists often wondered why theU.S. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.

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