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Tutor2u EU Notes
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8/7/2019 Tutor2u EU Notes
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GeoffRiley(tutor2u) EuropeanEverLarger
Union
February2011
www.tutor2u.net 1
AnEverLargerUnion
EnlargementoftheEUSingleMarketA2Economics:GlobalandEuropeanContextIssues(GeoffRiley,February2011)
TheMapofEuropeTheEUisnowthelargestintegrated
economicareain
theworld,
accountingfor
morethan30%of
worldGDPand
morethan17%of
worldtrade
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ExpandingtheSingleMarket FirstExpansion
1973:UK,IrelandandDenmark
MediterraneanSpirit1981:Greece1986:PortugalandSpain
EntryoftheNeutrals1995:Austria,FinlandandSweden
TheBigBang2004:Latvia,Lithuania,Cyprus,Malta,Slovenia,
Slovakia,Estonia,Hungary,CzechRepublic,Poland
2007:BulgariaandRomania
Backwardagrariansectors?
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Union
February2011
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Orcountriesandcitiesofdeepcultural
andpoliticalinterest
ManynewEUcountriesoffersurprises
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Union
February2011
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Andleadthewaytowardsalow
carboneconomy
BenefitsofEUMembership
TradeandInvestment
FreetradeaccesstoricherEUmarkets
Attractinwardcapitalinvestment
EU
funding Structuralfundsfortransport&environment
Farmsupport(butatlowerratethanOldEU)
Macroeconomicstability
Commitmenttowardsjoiningsinglecurrency
Mustbefullyfledgedmarketeconomiestojoin
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Union
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HowhaveNewEuropenations
performedsinceEUentry?
Therearemanyindicatorswecanlookat:
1. Volume/balanceoftradewithintheEU
2. Economicgrowthratesandcyclicalvolatility
3. Relativeproductivitylevels
4. Relativepercapitaincomes
5. Unemploymentrates
6. Consumerpriceinflation
7. Externaltradeandinvestmentbalances
DiningattheRichMansTableExports of goods and services, annual value Euro billionsSlovakian Exports to the UK
Source: EuroStat
99 00 01 02 03 04 05 06 07 08 09
billions
0.0
0.5
1.0
1.5
2.0
2.5
EUR
(billions)
0.0
0.5
1.0
1.5
2.0
2.5
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Union
February2011
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ExportsasashareofGDPPer cent
Exports of goods and services as a share of GDP
United KingdomSlovak Republic
SloveniaCzech Republic
Poland
Source: Reuters EcoWin
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
2030
40
50
60
70
80
90
100
110
120
130
140
%
2030
40
50
60
70
80
90
100
110
120
130
140
TradeBalanceasshareofGDPBalance of Trade as a share of GDPTrade Balance in Goods and Services
Slovak Republic Czech Republic Estonia United KingdomSource: Reuters EcoWin
00 01 02 03 04 05 06 07 08 09
-30
-25
-20
-15
-10
-5
0
5
10
%
-30
-25
-20
-15
-10
-5
0
5
10
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Union
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OutPacingtheUKonGrowthConstant Prices, Gross domestic product at market prices, 2000=100, Index
Comparing Economic Growth Rates
Poland [c.o.p 1 year] Czech Republ ic [c.o.p 1 year] Uni ted Kingdom [c .o.p 1 year]Source: EuroStat
04 05 06 07 08 09 10 11 12
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
7
Percent
-5
-4
-3
-2
-1
0
1
2
3
4
5
6
7
BalticStateshavebeenvolatileAnnual % change in Real Gross Domestic ProductVolatile Economic Cycles for the Baltic States
Estonia [ar 4 quarters]Lithuania [ar 4 quarters]
Latvia [ar 4 quarters]
04 05 06 07 08 09 10
-20
-15
-10
-5
0
5
10
15
P
ercent
-20
-15
-10
-5
0
5
10
15
LithuaniaEstonia
Latvia
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Union
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InvestmentratiosCapital Investment at Constant Prices, measured as a % of GDP
Increased investment has supported growth
Czech Republic Poland Bulgaria United KingdomSource: Reuters EcoWin
00 01 02 03 04 05 06 07 08 09
15.0
20.0
25.0
30.0
35.0
40.0
45.0
%
15.0
20.0
25.0
30.0
35.0
40.0
45.0
FiatinPoland
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Union
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StrongFDI
Lowbusinesstaxes
Lowbusinesstaxes
LowLabourcosts
LowLabourcosts
GrowingmarketsGrowingmarkets
NewEurope amagnetforFDI
Highlyliterate
population
Lowlandprices
CentralEuropeanLocation
Successofearlyprojects
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Union
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MotorwaysTransport Infrastructure - Total Length of Motorways
Poland Hungary Slovak Republic SloveniaSource: EuroStat
00 01 02 03 04 05 06 07 08 09
200
300
400
500
600
700
800
900
1000
KM
200
300
400
500
600
700
800
900
1000
ImprovementsinProductivityIndex of productivity as % of the EU27 averageLabour Productivity per Person Employed
Czech RepublicEstoniaSlovenia
PolandRomaniaBulgaria
Hungary
Source: Reuters EcoWin
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11
20
30
40
50
60
70
80
90
EU27=100
20
30
40
50
60
70
80
90
Czech Republic
Hungary
Romania
Slovenia
PolandEstonia
Bulgaria
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Union
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GrowthandLivingStandards
Fastergrowth
Higherproductivity
Increasedwages
Risingpercapitaincomes
EstimatedTrendGrowthPotential GDP, percentage change per yearEstimated Trend Economic Growth Rates
Euro ZoneCzech Republic
PolandUnited Kingdom
Source: OECD World Economic Outlook
04 05 06 07 08 09 10 11 120.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
Percent
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
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Union
February2011
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RelativePerCapitaIncomesIndex of GDP per head, purchasing power standard, EU=100
Income convergence for ten new EU members
Czech RepublicHungaryPolandSlovenia
EstoniaSlovak RepublicBulgariaLithuania
LatviaRomania
Source: Reuters EcoWin
00 01 02 03 04 05 06 07 08 09 1020
30
40
50
60
70
80
90
100
EU25=100
20
30
40
50
60
70
80
90
100
CatchingupandtakingoverGDP per Capita, purchasing power standard, EU25average = 100Catching Up and Overtaking!
Czech Republic Portugal Greece SloveniaSource: EuroStat
00 01 02 03 04 05 06 07 08 09 10
50
55
60
65
70
75
80
85
90
95
100
EU
25=100
50
55
60
65
70
75
80
85
90
95
100
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Union
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ThePictureonJobsPercentage of the labour force, annual average, source: EurostatUnemployment in selected New Member States
Poland Czech Republic Hungary SloveniaSource: Reuters EcoWin
03 04 05 06 07 08 09 100.0
2.0
4.0
6.0
8.010.0
12.0
14.0
16.0
18.0
20.0
22.0
P
ercent
0.0
2.0
4.0
6.0
8.010.0
12.0
14.0
16.0
18.0
20.0
22.0
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Union
February2011
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UnemploymentintheEUUnemployment - % of labour force, seasonally adjusted
Unemployment Rates
UKGermany
SpainPoland
Ireland
Source: Reuters EcoWin
05 06 07 08 09 100.02.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
22.0
Percent
0.02.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
22.0
AthirdoftheEuroZone's15.8millionunemployed
areinSpain
InflationAnnual % change in consumer prices (all items)Inflation Rates for Selected new EU States
Hungary Czech Republic Poland Latvia Euro ZoneSource: Reuters EcoWin
04 05 06 07 08 09 10
-5.0
0.0
5.0
10.0
15.0
20.0
P
ercent
-5.0
0.0
5.0
10.0
15.0
20.0
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Union
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EUEnlargementandtheUKeconomy
TradeFlows
FDIFlowsLabour
Migration
TradeExports of goods and services, annual data, current prices, billionUK Exports to some new EU States
PolandSlovakia
HungaryCzech Republic
00 01 02 03 04 05 06 07 08 09
billions
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
GBP(billions)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
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Union
February2011
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UKTradewithPolandAnnual value of trade, billion
UK Trade in Goods and Services with Poland
Imports from Po land Exports to PolandSource: Reuters EcoWin
00 01 02 03 04 05 06 07 08 09
billions
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
GBP(billions)
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
UKTradewithPolandAnnual value of trade, billionUK Trade in Goods and Services with Poland
Imports from Po land Exports to PolandSource: Reuters EcoWin
00 01 02 03 04 05 06 07 08 09
b
illions
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
GBP
(billions)
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
Polandnowtakes
asmanyexports
fromtheUKas
Chinadoes
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Union
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Migration PushandPullFactors
Wages
Welfare
TravelLanguage
Jobs
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Union
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TheMigrationStats
LongTermMigration
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Union
February2011
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SupportersofInwardMigration Freshskillsandboosttoinnovation
TwentytwoofBritain's114Nobellaureateswerebornabroad
Tesco,Marks&Spencer,EasyJet,Google,Yahoo!,eBay,YouTubeallfoundedorcofoundedbyimmigrantsortheirfamilies
Migrationisaformoftradeandtherearegainsfromtrade IfyougotoFranceforanoperation,itisclassifiedastrade;ifa
Frenchsurgeoncomeshere,itismigration
Reduceslabourshortages
RemittancesaddtoGNPofnewEurope
Netcontributiontogovernmenttaxrevenues Multiplierandacceleratoreffects
Maycontributetohighertrendgrowth Justifiedongroundsoffreedom,justiceandhumanrights
Opponentsofunrestrictedmigration
Extrawelfareburden
Downwardpressureonrealwagesandjobsfordomesticworkers
Socialpressuresandtensions
Pressureonpropertypricesandhousingrents
Somereportsquestionthesizeofthemacroeconomicbenefitofmigration
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EntryintotheEUinvolvesacommitmenttojointhesinglecurrencyatsomepoint
Butthetimingisflexible
5newEUstateshavejoinedsince2004
Slovenia,Malta,Cyprus,SlovakiaandEstonia
SomehaveapeggedcurrencyagainsttheEuro
Othersfavourafloatingexchangerate
DecisionsontheEuro
SomehavepeggedtotheEuroLocal exchange rates to the Euro, daily valuePegging to the Euro - Estonia and Latvia
Source: Reuters EcoWin
00 01 02 03 04 05 06 07 08 09 10 11
0.500
0.550
0.600
0.650
0.700
EUR/LVL
0.500
0.550
0.600
0.650
0.700 Latvian currency
15.620
15.630
15.640
15.650
15.660
EUR/EEK
15.620
15.630
15.640
15.650
15.660
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Poland currencydepreciationTop Pane: Real GDP Bottom Pane: Effective Exchange Rate Index
Poland - Growth of Real GDP and the Exchange Rate
Poland, Real GDP, precentage change from previous period, Constant PricesEffective Exchange Rate Index
Source: Reuters EcoWin
Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct
06 07 08 09 10
85
9095
100
105
110
115
120
125
130
Index
85
9095
100
105
110
115
120
125
130
0
1
2
3
4
5
6
7
Percent
0
1
2
3
4
5
6
7
AneverwiderEurope?Orrisksof
enlargementfatigue?
Iceland Croatia Macedoniaand
Montenegro
BosniaandHerzegovina Serbia Kosovo Turkey Ukraine,Georgia
orTunisia?
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Enlargement AWorkinProgress Enlargement oneofEUsgreatestsuccesses NewEuropewasvulnerabletotheglobaland
Europeanfinancialcrisis
ButmanycountrieshaveoutperformedoldEuropesince2007onavarietyofindicators
TheyhaveprovidedfreshdynamismintotheEU Europeneedsit!Since2005,Britain'seconomyhas
grownby2%,theEuroZone'sby4%,Brazil'sby25%,
India'sby47%andChina'sby69% Thepoliticalsignificanceofenlargementcannotbeunderestimated
MoreresourcesontheEUfromtheTutor2ublog