Economic Impact of the Eu Single Market

ECONOMIC IMPACT OF THE EU SINGLE MARKET

TABLE OF CONTENTS INTRODUCTION ……………………………………………………… 1. BASIC PRINCIPLES OF THE EU SINGLE MARKET ……………. 2. ECONOMIC GROWTH IN THE EU SINGLE MARKET ………….

2.1. EFFECT ON INCOME ………………………………………...

1 2 3 4 4 5 6 7 9 10 10 11 12 13 16

3. EFFECTS ON EMPLOYMENT …………………………………….. 4. CHANGES IN INTERNAL AND EXTERNAL TRADE …………...

4.1. INTRA-EU TRADE IN THE SINGLE MARKET ………………... 4.2. EU SINGLE MARKET AND EXTERNAL TRADE ……………...

5. INVESMTENTS AND THE SINGLE MARKET …………………... 6. IMPACT ON PRICES, COMPETITION AND PRODUCTIVITY ….

6.1. PRICES AND PRICE CONVERGENCE ………………………... 6.2. THE SINGLE MARKET AND COMPETITION ………………… 6.3. IMPACT ON PRODUCTIVITY ………………………………...

CONCLUSIONS ……………………………………………………….. REFERENCES ………………...………………………………………..

TABLE OF FIGURES Figure 1. Difference in EU GDP with and without the SMP …………... Figure 2. EU imports from third countries as a % of GDP ……………... Figure 3. FDI in EU as a percentage of corresponding EU GDP ………. Figure 4. Level of price convergence in the EU (1985-2000) ………….. 3 8 9 11

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INTRODUCTION

The main reason that underlined the motivation for establishment of the Single Market programme (hereinafter: SMP) was the so called “Euro-sclerosis” (Notaro, 2002, p.1), that was present in the early 80s in Europe, which resulted in economic underperformance, reflected in high prices, low level of competitiveness and rising unemployment. As a direct response to this unpleasant trend, the Commission White Paper was prepared in 1985, with the sole purpose to correct these rigidities and barriers, thus enable a solid base for an increase in the overall economic performance in the European region. The deadline for this correction was set at December 31st 1992. Since the White Paper was introduced, a substantial progress has been made in the liberalisation of trade and other barriers within the European Union (hereinafter: EU). That means that the implementation of the...