The Economy of The European Union: Characteristics, Economic

Facultat de Ciències Econòmiques i Empresarials
Facultad de Ciencias Económicas y Empresariales
International Business
Programme
2010/11
Programme
The Economy of The European
Union: Characteristics, Economic
Structure and Institutions
University of Alicante
Department of Applied Economic Analysis
Lecturers: Paloma Taltavull/Manuel Hernández López
Página 1 de 11
Facultat de Ciències Econòmiques i Empresarials
Facultad de Ciencias Económicas y Empresariales
International Business
Programme
2010/11
Subject description
Credits: Credits 5 ECTS
Contents
Lesson 1. Understanding the concepts and basic economic principles of
integration.
Lesson 2. The History of the European Union Process. Highlights.
Lesson 3. The European Union Institutions. The decision process.
Lesson 4. The Single Market and the four fundamental freedoms.
Lesson 5. The EMU: The Economic Union and Fiscal matters.
Lesson 6: The EMU: The Monetary Union. The Euro
Lesson 7: The EMU: The Monetary Union and the Monetary Policy
Lesson 8: European Union specific Economic Policies: Agriculture,
Territorial cohesion, Transports, Environment
Página 2 de 11
Facultat de Ciències Econòmiques i Empresarials
Facultad de Ciencias Económicas y Empresariales
International Business
Programme
2010/11
Objectives
The subject aims to analyse the past, present and future of
European
integration, on the basis of historic and economic reasoning. The process of
European integration and its effects will be assessed taking into account
differences in European Member States economies as well as considering the
EU as a whole at the international level.
Methodology
Learning will be based on both lectures and practical exercises:
•
Lectures will provide for a broad overview of each topic and for the
theoretical framework of the units.
•
Practical exercises will consist both of pieces of coursework presented
by students focusing on the analysis of a Lessonicular topic and
conferences held by visiting EU officials.
Assessment
1.- A student discussion paper on a specific topic (30%)
2.- A written examination (70%)
Página 3 de 11
Facultat de Ciències Econòmiques i Empresarials
Facultad de Ciencias Económicas y Empresariales
International Business
Programme
2010/11
Lecture Programme
LESSON I. Understanding the concepts and basic economic principles of
integration.
1.- The reasons for economic integration.
1. The theoretical approach: different stages, short- and long term
effects.
2. The benefits of economic integration
3. Stages on the integration process
2.- The relevance of the European Union Economy in the world.
3.- The EU as a group of interrelated economies.
4. Per capita income differences
5. Growth rates
6. Other features (population, inflation rate, unemployment...)
4.- ”What’s the European Union?”. The EU Constitution.
This lesson describes the economics fundamentals to explain the process of
integration, given some figures about the relevance of the European economy
in the world. It also analyses
the E.U process objectives, focus in identity
criteria of Europe, and describes the limits (geographical, sociological, political,
etc) of Europe. It also emphasizes the economic importance of the EU in the
globalized world, and the general debate on the E.U Constitution is discussed.
“What kind of EU” European Citizens want?. Which are the European Values?.
Is it true that the EU is a “purely economic” Treaty?.
Página 4 de 11
Facultat de Ciències Econòmiques i Empresarials
Facultad de Ciencias Económicas y Empresariales
International Business
Programme
2010/11
LESSON II. The History of the European Union Process. Highlights.
1.- From the European Communities to the Single European Act.
2.- The EU from Maastricht to Amsterdam: the three pillars.
3.- The EU from Nice onwards.
4.- The European Constitution
This preliminary lesson describes quickly the main events of the 45
years History of the EU
LESSON III. The European Union Institutions. The decision process.
1. The European Commission
2. The Council of the European Union
3. The European Council
4. The European Parliament
5. The Court of Justice
6. The Court of Auditors.
7. The Committee of the Regions
8. The Economic and Social Committee
This important topic is a necessary step to know “who’s who” within the EU
Institutions. The respective roles of the Council, E.Parliament, Commission,
Court of Justice, etc, are explained. The “modus operandi” and the decision
making process (“who is doing what?”) at European level is discussed in full in
this lesson, while debating on a variety of hot issues as: “the voting system”, the
open question on the transfer of political sovereignty, the so called question on
the “lack of democracy”, the number of commissioners
Página 5 de 11
Facultat de Ciències Econòmiques i Empresarials
Facultad de Ciencias Económicas y Empresariales
International Business
Programme
2010/11
LESSON IV. The Single Market and the four fundamental freedoms.
1. Introduction to the Single Market
2. The four fundamental freedom
After a description of what is and means the single market, an analysis is made
of the short/long term consequences (pros/cons) of those four freedoms. Very
critical questions are discussed in this lesson: Is the S. Market damaging the
territorial cohesion?. Should all 25 Member Sates have the same working
conditions?. What about the hotly debated “Bolkestein” directive? The
description of the four pillars of the Single European Marked, emphasizing
particularly in “the meaning” ( and specific bad/good consequences) of each of
them is followed by an analysis of the “competition” rules.
LESSON V. The Economic and Monetary Union (EMU). FIRST PART: THE
ECONOMIC UNION
1. Introduction
2. The economic union and national economic policies
3. The Fiscal Policy.
4. The major pillar: The Stability and Growth Pact (SGP)..
The Economic Union is the first part of this lesson. The BEPG report of the
Ecofin embodies the economic coordination for national policies. After
an
explanation on how –and why- this national economic policies coordination is
made, focus is directed on the main economic guidelines of the Ecofin: the
pensions issue, the flexibility of labour markets, the necessary budgetary
equilibrium, privatisation encouragement, Lisbon plan, etc. The second part of
this lesson refers to fiscal matters: how is difficult to harmonise national fiscal
policies given the sharp mental and social differences existing between the
Member States. A description is made of the timid steps already done in this
Página 6 de 11
Facultat de Ciències Econòmiques i Empresarials
Facultad de Ciencias Económicas y Empresariales
International Business
Programme
2010/11
field (ex: savings income tax directive). And a major room is given to a
description and economic discussion of the Stability and Growth Pact: What
lessons (political, economic,…) to draw of the recent changes on this Pact?
LESSON VI. THE ECONOMIC AND MONETARY UNION (EMU). Second
part: THE MONETARY UNION. THE EURO
1. Introduction
2. A short history of the European Monetary Union process
3. Maastricht 1992: historical decision for a single currency: Conditions and
calendar.
4. The Euro advantages and inconvenients
After an analysis of the long history of the Monetary Union process in Europe
and the lesson to be drawn, a description is given of the process and
convergence conditions for entry in the Euro as stated in Maastricht. The
economic logic of those conditions is explained and this logic is confronted with
both, the conceptual analysis of the Optimal Currency areas theory and the very
large experience of countries with quite different economic situations of certain
regions. The Euro advantages and inconvenient are studied and particular
emphasis is given to the “political” feature of the EURO, as a factor of union and
peace
LESSON VII. THE EUROPEAN SYSTEM OF CENTRAL BANKS (ESCB), THE
EUROPEAN CENTRAL BANK (ECB) AND THE MONETARY POLICY IN THE
EU1. Introduction
2. The role of each institution
3. The four tasks of the “Governing Council” and the ECB
4. The Monetary Policy
Página 7 de 11
Facultat de Ciències Econòmiques i Empresarials
Facultad de Ciencias Económicas y Empresariales
International Business
Programme
2010/11
A description of “actors” in the sphere of monetary policy is the beginning of this
lesson: ESCB, Governing Council, ECB, NCBs, etc. The objective of the single
monetary policy for countries of the Euro-zone is underline and the tools at the
hands of the responsible for Monetary Policy are developed. A technical
description on how, in concrete actions, the ECB and the Governing Council
implement the control of monetary stock in circulation, set the official interest
rate, manage the reserves requirement, etc is developed. The debate on
whether or nor it is appropriate a single monetary policy in cases of “asymmetric
shocks”, specific cyclical difficulties for a State Member, different economic
structural development, etc completes this lesson. Another debate refers to the
full Political independency of the ECB.: is it also a democratic deficit of the EU
LESSON VIII: EUROPEAN UNION SPECIFIC POLICIES
1. The PAC – Common Agricultural Policy
2. The policy for Territorial cohesion,
3. Transports Policy
4. Environmental Policy and others.
Página 8 de 11
International Business
Programme
2010/11
Facultat de Ciències Econòmiques i Empresarials
Facultad de Ciencias Económicas y Empresariales
References
Artis, M.J. and Lee, N.(1997), The Economics of the European Union, 2º ed.,
Oxford University Press
Hitiris, T.(1998), European Union Economics, Prentice Hall Europe
Myro,
R.(2000),
Economía
Europea:
Crecimiento,
integración
transformaciones sectoriales, Civitas
El-Aagra, A. (1998), The European Union, Prentice Hall, Europe.
Electronic references:
Some electronic sources:
Http://europa.eu.int
http://europa.eu.int/publications
Treaties
http://www.europarl.eu.int/basicdoc
EU Directives
http://europa.eu.int/eur-lex
Economic papers and Euro papers,
http://www.europarl.eu.int/studies
http://www.europarl.eu.int/comm/publications
Página 9 de 11
y
Facultat de Ciències Econòmiques i Empresarials
Facultad de Ciencias Económicas y Empresariales
International Business
Programme
2010/11
Guidelines to write the final report:
Students have to cover the following chapters in each issue:
.1.1.
.1.2.
.1.3.
.1.4.
.1.5.
.1.6.
Introduction to the subject: Description and problematic
Legal European Union basis: Directives related to the issue
How directives are implemented
Economic analysis of the issue (more than descriptive)
General assessment
Conclusions
Each discussion paper has to be presented by students in the lectures time.
During and after the presentation, discussion about the issue by students and
teachers is recommended.
DISCUSSION TOPICS
1. EU Historical Issues: From Treaty of Rome to build EU
2. The EU positions vis-à-vis third countries :The EU in the World.
3. The EU trade Policy : external (trade flows, the EU position in the OMC,
capital flows, etc)
4. The EU trade Policy: internal (Single market economic philosophy, main
compulsory rules, policies –public aids-and organizational framework,
Freedom of investment, payments, and capital.)
- The Economic and Monetary Union (EMU) issues:
5. Economic convergence prior to EMU: setting criteria and economic
philosophy. The debate. The macro benefits of the convergence efforts.
6. The Economic Union : “Modus operandi” of Institutions: Commission and
Parlament. Is there a need for an economic European “Government”?.
7. Sustainable growth through fiscal policy: description and reasons for
Stability and Growth Pact. The debate nowadays.
8. The Monetary Union: Institutional issues: The European bank system
and the channels of monetary stock control.. The role of ECB and
autonomy,… Is there a lack of sovereignty?
Página 10 de 11
Facultat de Ciències Econòmiques i Empresarials
Facultad de Ciencias Económicas y Empresariales
International Business
Programme
2010/11
9. The Monetary Union: “The” objective of Monetary Policy. The problem of
asymmetric shocks. The i-rates setting.
10. The Monetary Union: Analysis of the introduction of the euro. Pros/cons
of a single currency. Assessment. The euro evolution in the exchange
markets after 2 years.
- Enlargement and the Agenda 2000:
11. The Treaty of Nice. Principles and the concrete steps towards the
enlargement. Calendar.
12. The consequences of the enlargement (assessment): (two groups)
13. For the existing institutions: The Giscard d’Estaing convention and
the
importance of the European Constitution: the new shape of
the EU.
14. Concerning Structural Funds, PAC, competition rules, etc
15. For the future role of Europe in the world.
16. Experiences from East countries view
17. Where are the geographical limits of Europe?. Reasons for the entrance
of Turkey and others “close” countries.
- The EU Policies:
18. The PAC: description, problems. The actual debate.
19. Fisheries: description, problems. The actual debate
20. The
EU
employment
policy:
market.Employment/unemployment within the EU.
EU
labour
21. Industrial Policies and the general issue of “public aids”.
- The remaining tasks for a full European Union:
22. Fiscal matters: ex, the with-holding tax issue
23. Defence and security issue
24. What kind of (political, sociological, economic, etc) Union citizens want?.
The remainder Agenda
Página 11 de 11