Is the Euro, as a Common Currency, a Tool for Integration?
The European Union (EU) has become an icon of successful regional integration. Despite this success, the on-going integration process has two different speeds; while economic integration has been fast, steady, and assertive, political integration has been slow and demoralizing at times. This is justified by the complicated idiosyncrasy of the EU structure. However, this complacency with integration difficulties is becoming dangerous as the EU is at a critical moment with respect to both economic and political integration. In fact, many voices are claiming that the EU integration process has come to an abrupt end due to the latest difficulties in encouraging important structural reforms, implementing sound economic requirements, and struggling to agree on the Reform Treaty. Gros and Micossi have stated that: “the EU’s inability to meet the challenges of integration is due to rigid economic structures and inadequate human capital—weaknesses that according to conventional wisdom can only be tackled by national policies, with little role for the Union and common policies. On the contrary, substantial policy spillovers across the EU justify strengthened policy coordination for labor-market, immigration and welfare reform”. However, this criticism is opportunistic because it does not take into account all that has been achieved in such a short period of time given the number of different countries involved, especially after the introduction of the EMU and the adoption of the euro as a common currency. Currently, there is an academic debate on whether economic integration precedes political integration or vice versa: this debate mainly focuses on explaining whether regional integration is caused by political or economic factors. Some assert that political decisions have been motivated by economic reasoning , and explain that historical evidence proves that “descriptions of fluctuations of international economic integration identify clear economic dynamics behind political decisions.” Others believe that political decisions are the propellers of regional integration and, as Balassa states, “political motives may prompt the first step in economic integration.” Regardless of this debate, this paper will explain how the introduction of the euro has facilitated the EU’s regional integration process, which encompasses both economic and political integration, and has allowed Europe to blossom ¨into a continent that is widely admired as prosperous, diverse and caring.¨
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