Economic Integration

Paper Summary:

The paper examines the possible forms of regional economic integration in explaining the steps in the evolution from European Coal and Steel Community (ECSC) to European Union (EU). The paper analyzes how EU member countries have benefited from such integration by using data concerning aspects of EU member nations' economies. The paper concludes by contrasting expected economic benefits from an EU-type integration, based on traditional regional economic integration theory, with the actual benefits received by EU member nations after such economic integration.

From the Paper:

"Euro area countries' interest rates would be expected to be at or close to each other, based on regional economic integration theory. Investments among members that share a common currency would be free of all currency fluctuation risks, and thus be able to safely invest in the country whose interest rates are highest. A Eurozone country which is in need of investment funds would, according to theory, raise their interest rate slightly above the euro area rate to entice funds to move into their country. Investment funds would flow into the country until the interest rate is pushed back down to the euro area rate. A monetary union such as the euro zone thus allows funds to flow risk free into the country where they are most needed, using resources in the most efficient fashion."

Sample of Sources Used:

• Federal Reserve Bank of Dallas. "European Economic Integration: A Conflict of Visions". Southwest Economy 4 (2005) 1, 12-15.
• Henrekson, Magnus, Torstensson, Johan, Torstensson, Rasha. "Growth effects of European integration". European Economic Review 41 (1997): 1537-1557.
• OECD. "Annex Table 35: Long-term interest rates". 23 June 2008. <http://www.oecd.org/dataoecd/5/50/2483826.xls>.
• OECD. "OECD International Regulation Database: Foreign ownership barriers". 14 November 2005. <http://www.oecd.org/dataoecd/40/45/35655265.xls>
• Quinn, Jane Bryant, Elizabeth Angell and Temma Ehrenfeld. "Here comes the Euro". Newsweek. 26 October 1998. 63.

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