Renate Ohr

Different Efforts in European Economic Integration: Implications of the EU Index

European integration is a multilayer process consisting of significant differences in efforts and capabilities of the Member States individual EU participation. Hence, general statements about the national level of European economic integration are very vague. In order to fill this gap, this article presents a composite indicator measuring the extent of economic integration within the European Union – the EU Index. Existing composite indicators concerned with economic integration (globalization indices) were not designed to capture the specific European dimensions. The EU Index offers a unique basis, as now the national differences can be illustrated by one statistical measure. Large heterogeneities are found between the Member States with respect to overall European economic integration and to various sub‐indices. By using cluster analysis, it is also shown that the prevailing economic heterogeneities in the EU are combined with a strong and even growing clustering of its members, thereby challenging present and future steps of European integration.

The Euro – a 'Must' for Small European States?

This paper deals with the question of what impact membership of the European Monetary Union (EMU) has had on small European states. We will also analyze whether or to what extent a large number of small member states affect the EMU itself when they vastly outnumber the large countries. We conclude that the small countries in the European Union are far from creating a homogeneous group. They differ in the length of EU membership, income per capita, membership and non-membership of the EMU, production structure, foreign trade policy, and stability readiness. However, they do share some characteristics, particularly their relatively high openness, through which domestic macroeconomic variables are easily influenced by external shocks. The welfare gains of a small country joining the eurozone depend on the extent to which the benefits (if existent) of higher financial credibility outweigh the loss of autonomous monetary policy. Finally, with regard to their significance in the EMU, in no case should cutbacks be made for small countries concerning the stability requirements.

Deepening Integration in an Enlarged EU: A Club-theoretical Perspective

Abstract The paper focuses on the problem of a simultaneous deepening and enlargement of the EU from the perspective of club theory. The EU can be perceived as a club that provides several non–rival but excludable goods to its members. Contrary to purely collective goods, for which the club size is infinite, club theory starts from the assumption that membership size is an endogenous variable, as is the provision level of club goods. In order to enhance the quality of EU governance, it is concluded that the increasing heterogeneity of EU members requires a systematic initiative of creating clubs within the club. The treaty agreed at the Nice summit in December 2000 has been as insufficient to meet these requirements as will be the Treaty establishing a Constitution for Europe.

Homogeneous groups within a heterogeneous community: Evidence from an index measuring European economic integration

In the light of the current economic debt crisis within the Euro zone, the heterogeneity of EU members has becoming increasingly apparent. This heterogeneity is evident not only in some single macroeconomic variables but also in the level of economic integration with the other EU members. Despite the common use of the term European integration, neither a uniform definition nor a holistic economic approach to this concept exists. Thus, the different steps and processes of European integration are hard to quantify, thereby making it almost impossible to argue objectively whether an individual EU member state has fallen behind the general speed of European integration or whether the distance to a potential core group is undesirably large. In order to fill this gap, we have developed a composite indicator - the EU-Index - measuring the extent of European economic integration of the EU member states. The EU-Index exhibits large heterogeneities between the member states with respect to overall European economic integration and with respect to various sub-indices. By using cluster analysis, however, we find relatively homogeneous country groups within this heterogeneous community. The prevailing economic heterogeneities combined with the strong and even growing clustering of EU members may create fundamental difficulties for further integration of the European Union, and may even put existing integration steps (such as the creation of the European Monetary Union) into question. The EU-Index thus offers a unique statistically solid base for political discussions and empirical investigations, since now the degree of European economic integration is numerically tangible and can be determined individually for each country.

International Economic Integration

I Theoretical Aspects of International Integration.- Impact of Factor-Market Integration on Supply, Demand and Trade - A Neoclassical Analysis.- The Significance of Human Capital for International Competitiveness in the Face of the Growing Integration of the Global Economy.- Overlapping Integration Areas.- II Aspects of European Integration.- Promoting Economic Integration by the EMS?.- The Belgium-Luxemburg Economic Union.- Linkages Between Monetary Union and Political Union in the European Union.- The Decree on the Eco-Audit by the European Community - An Example of Legislation in the Form of Deregulation.- Integration Within the Banking Sector.- III Integration Outside Europe.- Structural Adjustment in a Monetary Union - Some Considerations about the West African Franc Zone.- Deep Integration, Shallow Regionalism, and Strategic Openness: Three Notes on Economic Integration in East Asia.- Divergence or Convergence as a Consequence of Regional Integration? - NAFTAs Impacts on Mexico.

Small but beautiful? Economic impacts of the size of nations in the European Union

This paper highlights the economic meaning of the size of the state for members of the European Union, thereby making the economic success of EU states statistically tangible. Firstly, we show in descriptive illustrations that the theoretically expected characteristics of small countries clearly apply to the current EU states. From the theoretical perspective, only the bivariate relationship between the population size and the economic growth initially depicts an unexpected sign. However, the econometric analysis performed on our panel data set confirms the assumption that this relationship is strongly influenced by factors other than population size, such as the duration of EU membership, the level of economic development (transformation process) and the increased development potential provided by EU funds. When subtracting these effects through appropriate statistical methods, there is an overall significant positive dependence of economic growth on the size of the state.

Geschäftsmodell Deutschland und außenwirtschaftliche Ungleichgewichte in der EU

ZusammenfassungDie vergangenen Jahrzehnte waren weltweit durch eine Zunahme der außenwirtschaftlichen Ungleichgewichte gekennzeichnet. Den Leistungsbilanzüberschussländern, insbesondere Deutschland, wird in diesem Zusammenhang zunehmend vorgeworfen, durch zu moderate Lohnsteigerungen wesentlich zum Aufbau der Ungleichgewichte beigetragen zu haben. Vor diesem Hintergrund werden im vorliegenden Beitrag auf Basis einer Paneldatenanalyse die Determinanten der Leistungsbilanzungleichgewichte in der Europäischen Union ermittelt. Die Ergebnisse zeigen, dass die internationale preisliche Wettbewerbsfähigkeit der Länder nur eine von vielen erklärenden Variablen darstellt. Vielmehr gehen die Ungleichgewichte wesentlich auf unterschiedliche Sparneigungen, sowohl der öffentlichen Hand als auch des privaten Sektors, zurück. Folglich wären die an Deutschland gerichteten Forderungen, zum Abbau der Ungleichgewichte die moderate Lohnpolitik zu beenden, allein nicht zielführend. Stattdessen müssen andere Wege gefunden werden, die Binnennachfrage in den Leistungsbilanzüberschussländern zu stärken und die Ausschöpfung bestehender Sparpotenziale in den Leistungsbilanzdefizitländern zu erhöhen.AbstractDuring the last decades, current account imbalances increased all over the world. In this context, countries with current account surpluses, in the European Union especially Germany, are increasingly blamed for their modest wage policies, which are seen as the main reason for global imbalances. On the basis of a panel data model, the present paper indentifies the determinants of current account imbalances of EU Member States. As the results show, price competitiveness is, although significant, only one out of many explanatory variables. Instead, current account imbalances are substantially caused by divergent propensities to save. This does not only relate to public, but also to private savings. Accordingly, demands addressed to Germany and other countries for higher wage agreements alone would be unrewarding. Instead, domestic demand in surplus countries should be increased by other means. On the other hand, in countries with current account deficits, existing savings potentials should be adequately exploited.

The Euro in its Fifth Year: Expectations Fulfilled?

In the run-up to the signing of the Maastricht Treaty, Germany experienced an ongoing discussion about chances and risks of a monetary union. A vast majority of economists expressed their criticism about the establishment of a single European currency, as stipulated in the Maastricht Treaty. The following brief survey of arguments in favour of and against monetary union in Europe is intended to summarize the discussion of the 1990s. It is very likely that these arguments will come up in one form or another in the Swedish debate as well.1

Exchange Rate Policy in Eastern Europe

The transition process from planned economy to free-market economy and from eastward integration to westward integration in the Eastern European countries is far from complete. The increased openness and integration into free enterprise practices requires on the one hand further liberalisation measures through privatisation, deregulation and the removal of barriers to trade. On the other, functional, liberalised capital markets must be established, for which in turn convertible and stable currencies are an important prerequisite. Moderate budget deficits, low inflation rates and increasing political stability are necessary for a reduction of the country-specific risk premiums. Moreover the choice of exchange rate regime can exercise an important influence on the structure and success of the transition.

Divergence or Convergence as a Consequence of Regional Integration? — NAFTA’s Impacts on Mexico

Regarded generally, international economic integration is comprised of all the forms of international economic interdependence. Such interdependences may arise from the mutual exchange of goods, services, and production factors, i.e. from the interlacing of markets (market integration). Economic integration, however, may also be caused by a common incorporation of certain fields of politics into a new central institution (political integration or institutional integration). Furthermore, integration may refer to specific sectors or branches (e.g. the agricultural market or aircraft construction); but otherwise it also may refer to overall relations and the way in which they are influenced, for example, by a general reduction of taxes and duties or by the lifting of capital or exchange controls against trading partners (Ohr 1994a, p. 147).