The decision concerning economic integration is often regarded as a major consideration in the European Union (EU) which tends to facilitate to build an effective and rigorous framework of monetary practices of the member nations. …
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The process of economic integration has been developed by the EU through involving the facet of political integration amid the member nations in order to establish a well-built monetary paradigm which could facilitate to strengthen the trade activities through considering efficient monetary guidelines (Seller, 2007).
Political integration has been considered as the practice whereby countries pass over the desire as well as the ability to perform domestic and foreign guidelines of each other in an independent manner. This process is intended to strengthen decision making process of the nations rather than seeking mutual decision in terms of developing their new central organ. The term ‘political integration’ is also defined as a framework whereby the political leaders in different settings of national districts are influenced to alter their desired expectation as well as political activities to a well-structured new centre (Bache & et. al., 2011). Emphasizing upon the different practices and decisions of the EU in the context of monetary phenomenon, the major purpose of this report is to discuss the concept of economic integration in the EU.
The process is intended to uphold lower prices both for the distributors and customers with the intention of enhancing the joint economic efficiency of the nations (Jovanovic, 2002). The concept of economic integration has been derived from Economic and Monetary Union (EMU) which had been taken by the European Council in the year 1991 and was preserved later under the treaty of EU. EMU has been recognized as an early step in terms of practicing the process of economic integration. The extent of economic integration can be segregated into six different steps which are designed to augment efficiency and empower the economic development of the states. In accordance with the economic integration process designed by the EU, the six major steps are namely the Preferential Trading Area, Free Trade Area, Customs Union, Single Market, Economic and Monetary Union as well as Complete Economic Integration (European Commission, 2012). Preferential Trading Area (PTA): Preferential trading areas (PTA) can be stated as certain areas, regions, states or nations among which the trade activities are conducted in a minimum custom barrier (Holden, 2003). Free Trade Area: It can be recognized as a group or collection of certain countries that appeal to maintain low trade policies as well as control mechanisms in terms of tariffs while performing trade activities amid each other. Free trade areas endorse the approving nations to freely execute trade activities of their products and/services so as to create economic efficiency of both the countries (Rodrigue, 2013). Customs Union (CU): The step tends to set widespread external tariffs between the member nations and
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The alternative debates embrace a number of new aspects of integration within the EU which entails a number of insights. These include a different analysis from that of "new monetarism" (see Arestis and Sawyer, 1998), new objectives for economic policy to include employment and growth, and new institutions to reduce various kinds of disparities across the EU.
This perhaps, can be termed the greatest single accomplishment the integration of European States has accomplished (John Gillingham, p.xi, Preface, 2003).
Since its inception in the 1950s, the integration of the States in Europe has witnessed changes that can be best described in four parts.
A successful transition to capitalism in Eastern Europe could revitalize Western Europe, but a failed transition would threaten Western Europe politically, economically, and socially ("Euro Area-Another Cyclical Recovery" 24). During the period of integration, the EC can be seen as a mentor to the countries of Eastern Europe.
EU is inconsistent with conventional sovereignty rules. Its member states have created supranational institutions (the European Court of Justice, the European Commission, and the Council of Ministers) that can make decisions opposed by some member states.
It was the ruins of World War II that firmed up such political will to create the European Union. Thus, the goal to secure peace and stability and foster economic development and prosperity in the region was enshrined in the founding charter of EU. By this criterion, integration has been a big and impressive achievement.
The author states that most of the countries which are part of EU no longer have the luxury of printing their own money and as a result, the problem of the sovereign debt crisis is lingering on. One can compare this problem with the case study of American. The USA is probably the country with highest levels of debts.