I will argue that the process of European integration that led to the creation of the European Union (EU) has put in place processes that will in time fundamentally transform the economic landscape on the continent. In particular, the Single Market Act in 1986 and the launch of Economic and Monetary Union (EMU) at the beginning of 1999 will help create a domestic market for European firms that will allow them to reap the scale economies and efficiencies that have typically only been available to U.S. firms. I will also argue that the European Commission deserves credit for beginning the process of breaking down barriers to competition in the form of state subsidies to industry. While a lot remains to be done, the upside potential of the EU should not be underestimated.
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Article provided by Federal Reserve Bank of Dallas in its journal In Depth.