Money, Market & More
EUROPEAN UNION
What is the European Union?
The EU is a political, economic community of 27 member nations mostly from Europe. It is a single market created by a system of law which applies to all member states guaranteeing freedom of movement of people, goods services and capital.
Formation of the EU
After World War II, to escape extreme nationalism, European countries formed economic councils to promote co-operation among the member states. The first of these was the European Coal and Steel Community in 1951 which evolved over time into the present day European Union. The initial scope of such councils was only economic but now the European Union has a wider span with a common economic, political and legal structure.
Economic Policies of the EU
Single Market – The single market concept gives four freedoms to the member states – free movement of goods , services , capital and people within the European Union.
Monetary Union – The EU has a single currency Euro which was launched in 1999. This is to build a single market by easing travel (of both goods and citizens), eliminate exchange rate problems, provide price transparency, single financial market, stability and low interest rates etc.
Competition – The EU has a legal system to ensure undistorted competition within the market and it regulates anti-trust issues, approves mergers, breaks up cartelsand works for economic liberalization through the competition policy.
Budget – The EU also has a common budget which is (to b cont...)
The importance of the European Union for the rest of the world and Asia
The EU even though it’s still evolving is a very important body for the world. Today, we talk about globalization i.e., eliminating barriers among nations. The EU has been successful to a great extent to achieve this. It has succeeded in creating a common market allowing free movement of goods, people and capital – which are the main tenets of free trade or globalization.
There is a lesson in the EU for Asia too. After World War II, Europe was fragmented, destroyed by war and highly nationalistic. For the EU to evolve from there with the bitter rivals of WW II – France & Germany – coming together in a common economic and political unit is an achievement. Even the poorer eastern European countries have benefited from it. Asia, especially south Asia can also leverage this same advantage if we have a similar strong vision and commitment to work out our differences. We have similar cultures and standards of living, therefore increased political and economic co-operation will bring advantages at various levels.
The EU has shown the way forward for globalism and the potential of trade when free trade is practiced. The next challenge would be to replicate and/or to expand this concept to bring greater benefits of free trade to larger sections of the world economy.