Europe is one of the most important cultural centers in the history of mankind. This is the first region of the world within which the successful integration of countries into a single union has been carried out. Eurointegration was carried out by mutual agreement of the parties, lasted a century and, moreover, continues to this day. At the moment, the European Union is one of the strongest integration groups on the planet. It is also a complex political system, without which the existence of an association of this scale is simply impossible. The economy of Europe, and more precisely the countries of the union, is independent and quite competitive.
History of Economic and Political Development
The European Union, as an association of European states, arose only in the middle of the 20th century and consisted of only six states. The reason for the start of integration was World War II, as a result of which most European countries lay in ruins. The destroyed economy, the massive reduction in the working-age population, the need to prevent another war and calm the aggressor in the person of Germany led to the idea that it would be easier to exist within the framework of the union.
The first associations were purely economic and commercial in nature. In 1951, the Benelux countries, France, Italy and the Federal Republic of Germany signed an agreement on the creation of the European Economic Union, an association under which Luxembourg controlled coal and steel prices. A little later, in 1957, these countries took the initiative to create Euratom, which dealt with nuclear energy issues.
What came before the EEC
The most important moment in the history of European integration is the date of the formation of the European Economic Community, designed to remove customs barriers between countries and contribute to the development of the European economy as a whole within the framework of a common market. Formed in 1957 by France, Italy, Germany and the Benelux countries, it lasted until 1993. And in 1973, the union replenished with Great Britain, Ireland and Denmark.
In 1992, as a result of the merger of the EFTA and the EEC, the United Economic Community was formed. A year later, the EEC was renamed the EU (European Community), thereby becoming one of the most important pillars of the European Union. Based on it, the agreement on the creation of the eurozone in 1999 later entered into force, where the single European currency, the euro, began to operate.
Retrospective of economic growth in Europe
A conversation about the European economy and the development of European countries within the framework of various associations should begin with the period of the integration process, namely, after the war. After World War II, Europe lay in ruins, large industrial centers and housing estates were obliterated. During the fighting, a significant proportion of the able-bodied population died. The decline in production rates and colossal external debts forced the governments of Western Europe to switch to a policy of nationalization. Industry and the banking sector passed under the full power of the state. Cards for many consumer goods were introduced.
However, the end of the 50s and the beginning of the 60s of the last century in the history of Europe is rightly called the golden time. So, against the background of such unpopular measures and devastation, did the states manage not only to return to the pre-war pace of production, but also to exceed their economic indicators by several times? So, in just over 30 years, by 1979, Germany’s GDP increased 3.4 times, and France and Italy - 3 times. A number of reasons contributed to this.
First, the development of the economy in Europe was largely accompanied by low prices for raw materials and energy, mainly hydrocarbons. Secondly, the influx of unskilled and cheap labor to western Europe from Asia, Africa, and some countries of Latin America helped. Thirdly, the financial and material assistance of the USA to the European states, which has been provided since 1948 in the framework of the Marshall Plan, was of particular importance.
Economic crises in Europe
Despite the active growth of production and consumption, already in the mid-1970s in Europe there were trends in the economic crisis. Excessive state participation and imposed bureaucracy hindered the development of private business. A sharp jump in oil prices, which is a necessary resource, had an extremely negative effect on the industrial sector in the early 80s. Keynesian economic model has clearly become obsolete. Then the neoconservatives came to power in the late 80s: R. Reagan, M. Thatcher, J. Chirac. The adopted policy of neoconservatism and the information revolution, due to the advent of the first personal computers and the Internet, were able to bring European countries out of the crisis.
However, crisis phenomena were observed later. In the early 2000s, the level of consumption was so high that it did not correspond to the real pace of economic development. Since 2002, a credit financial bubble gradually began to inflate. In the same year, a single European currency was introduced. How much was the euro at that time? In relation to the ruble, 1 euro was worth about 32.5 Russian rubles. Inflating the financial bubble has made adjustments to currency quotes. And its collapse in Europe led to the severe economic crisis of 2008.
Territorial division of Europe
As part of the study of Europe, it must be understood that this vast territory is represented not only by the European Union or the eurozone. Europe is not exclusively the European Union. In accordance with various variations of the division (from the UN, the CIA of the Cold War) in Europe, there are four parts according to the UN classification: northern, western, southern and eastern. The main representatives of the north are Great Britain, Scandinavian countries; West - France and Germany; south - Spain, Italy, Greece; East - Poland, Ukraine, Belarus, Romania.
Within Europe, various integration groups are also distinguished. The most important of them is the European Union, which includes 28 countries with the most developed economies. It is an economic and political association with an extremely intricate internal structure. There is also the United Nations Organization (UN) and the NATO military bloc, the purpose of which is to provide all possible security for their countries. Most European countries are members of the WTO, a global trade association.
The European Union is a key association in European territory
The process of integration of European states began in the middle of the XX century and continues to this day. At the moment, this is the only association in the world that has moved to the fourth stage of integration, namely the stage of economic union. What follows is only the full integration of the policies and economies of the states. The union includes 28 countries from all parts of Europe. The last major expansion was in 2004, and in 2013 Croatia joined the EU.
510 million people live in the EU. Since 1999, the currency of the European Union is the euro. There is constant communication between the countries that are members of the union due to the absence of trade duties, passport control, that is, everything that in any way restricts the freedom of movement of people and products across state borders. The EU is an extremely complex system, managed and controlled by many institutions: the European Council, the Commission, the Audit Chamber, Parliament and others.
Eurozone and single currency
The eurozone, unlike the European Union, includes only 19 European countries. It is a monetary union, created in 1999 and expanding to this day. So, the last participating countries at the moment are Latvia and Lithuania in 2014 and 2015, respectively. The accession of Denmark, Poland, the Czech Republic, Bulgaria is expected soon. The nuance is that, according to the rules of the eurozone, the state, before joining the monetary union, must take part in the two-year process of establishing exchange rates.
Accordingly, the eurozone currency is the euro, which is used in its monetary policy. The direct circulation of banknotes and coins on the territory of the countries included in the union began in 2002. Then all the financial functions from the banks of national states pass to the European Central Bank.
The economy of the single European currency zone
The growth rate of the economies of 19 countries included in the eurozone as of 2018 decreased, but not significantly. II quarter showed less successful results than I. The level of total GDP increased by 1.4%, in contrast to the previous mark of 1.5%. The growth rate of imports in the II quarter exceeded the level of exports by 0.5%, which was expressed in the negative trade balance. The index of consumer confidence in the economy fell in countries: from 111.6 points to 110, 9.
The Eurozone economy in 2018 is supported not by trade, but by domestic consumption and business investment, which increased by 1.2% in the II quarter. From the positive aspects, it can also be noted that in September the unemployment rate fell to a record level since 2008. Now it is 8.1%, which is a good result compared to 2013 (12.1%). The lowest unemployment rate was recorded in the Czech Republic (2.5%), and the highest - in Greece (19.1%).
Economics of Western Europe
As already mentioned, Western Europe is mostly represented by the strongest regions - France and Germany. The economy of Western Europe is based on the services sector, rather than industry and agriculture, which speaks of the post-industrial era of development. For example, in France, 75% of the working-age population is employed specifically in the services sector.
Germany has the most stable economy in Europe, which ranks third in the world in terms of GDP ($ 3.7 trillion with an annual growth rate of 2.2%). GDP per capita is 45 thousand dollars. In 2016, the country exported goods and services worth $ 1.25 trillion, which made it the third largest economy in the world in terms of export. Imports amounted to $ 973 billion, which resulted in a positive trade balance. The main export items: automobiles and spare parts for them, medicines, aircraft. Imports - commodities: spare parts, medicines, crude oil The German economy, including low unemployment rates, is heavily dependent on trade: exports provide one in four jobs, and in industry every second.
France also plays a significant role in the economies of developed countries in Europe. With its GDP of $ 3.1 trillion, the country has consistently ranked second in Europe in terms of economy. In 2016, it exported nearly $ 500 billion worth of products. However, the trade balance has been negative since 2001. In 2016, France bought 50 billion more than it sold. Due to the lack of profit from trade, the country is forced to stimulate domestic consumption with the help of cheap loans. The main exports of France: aircraft, medicines, cars and parts, iron and steel. Import: automobiles, cars, various raw materials (crude oil, gas), chemical products. A distinctive feature of the French economy is the significant participation of the state (up to 60%).
Economics of Eastern Europe
Unlike Western countries, it cannot be said about Eastern Europe that it has a strong economy. Often within the EU, Eastern European countries are subsidized regions that need external support. As part of financial assistance, there is a link to how much the euro costs. To consider cases with the economy in Eastern Europe, we take two characteristic representatives - Poland and Romania.
In 2017, the Polish economy was moved from developing to developed. This is the eighth strongest economy in the EU with a fairly fast GDP growth rate of 3.3% per year. In 2018, it amounted to $ 615 billion ($ 31.5 thousand per capita). Exports in 2016 exceeded imports by $ 2 million: 177 million compared to 175. The export mainly includes automobiles and spare parts, furniture, computers. Import: cars, crude oil, medicines. The main trading partners of Poland are: Germany, Czech Republic, Great Britain, France. Trade is carried out mostly within the framework of the European Union. The country is characterized by rather low levels of inflation and unemployment - 2 and 5%, respectively.
Romania is one of the poorest countries in the European Union, based on the index of social exclusion and the risk of poverty. The standard of living of the population in Europe, namely, in its eastern part, is generally much lower than in the western. The country's GDP is quite high and amounts to $ 197 million (11th place in the EU). The growth rate is also significant - 5.6% per year. The appearance of a poor country is partially consistent with the level of GDP per capita, which is expressed in only 9 thousand dollars. Romania is characterized by a negative trade balance: $ 65 million of exports versus 72 million of imports. The country mainly exports cars and spare parts, tires, wheat. Auto parts, medicines and crude oil are imported. The main trading partners of Romania: Germany, Italy and Bulgaria.
