The Economic Integration of the European Union and the Need for Its Considerable Change
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The modern world is characterized by the presence of different complex relations between nations and individuals. One of the reasons for this characteristic is the progress of humanity in knowledge. However, there are various components, which influence the emerging social and economic complexity. One of them is a persistent rivalry between nations and corporations. It is evident that the number of people on the planet is annually increasing whereas the planet’s resources are limited. Therefore, different companies and countries use a cooperative strategy in order to assure the availability of the markets and resources. As a consequence, the humanity experiences the tendency towards globalization. One of the most evident examples of globalization is the European Union, which is a conglomerate of different European countries uniting their economic and social ties.
This paper investigates the progress of the European Union as well as the consequences of its formation for the participating countries and the rest of the world. It analyzes the reasons for the countries to form such a conglomerate as well as the challenges of being a participant of this social, economic and political structure. The outcomes of this analysis lead to the conclusion associated with the future of the European Union. It is suggested that the countries should practice the approach of the mentioned integration. However, the total integration is extremely undesirable because it puts at risk economic, political and cultural identity of the participating countries. Thus, the European Union requires the introduction of specific reforms, which allow mitigating the typical problems of the struggle between the processes of globalization and intentions of saving the national identity.
The Phenomenon of Economic Integration between Countries
Economic integration has become one of the most widespread phenomena in the world because it allows the participating countries to strengthen their economies through partnership. The historical analysis of the evidence of international economic integration demonstrates that different societies have been practicing it long centuries ago. For instance, one of the famous integrative trade solutions between nations was the Silk Road. It united a great number of nations across continents providing them with economic benefits of free trade. Thus, traders, pilgrims, and warriors travelled from Rome to Syria and so far as China during the years of its most active use (A brief history of the Silk Road n. d.). The trade routes connected East, South, and Southeast Asia with the Mediterranean region, North Africa, and Europe allowing the nations to exchange goods and services for several centuries (Adler 2012). Similarly to the trade of goods, the Silk Road was the basis for free and peaceful cultural exchange, which serves as one of the examples of ancient globalization. At the same time, the decline of the Silk Road is associated with the critical change of the economic situation in the world caused by the discovery of India in 1497 CE (A brief history of the Silk Road n. d.). As a consequence, the naval trade routes on far distances had become more preferable because of their speed and cargo transporting abilities.
Furthermore, one of the examples of economic and social unity in recent history is the Soviet Union. Emerged as a consequence of the Revolution of 1917 – 1921, it was the attempt of creating a country in which every republic could access resources and freely develop on the basis of communistic collective values (Kenez & Górska 2008). It can be highly debatable whether the methods of governing of such a huge conglomerate by Lenin or Stalin were relevant. However, they allowed creating a union of 15 republics, which shared a single social economic and cultural framework and were one of the biggest countries of the world. Moreover, it is significant to denote that the Soviet economy developed faster than the capitalist’s economies in the middle of the 20th century despite the deterioration caused by the World War II (Gowans 2013). As a result, the USSR broke only in 1991 because of the systemic flaws, corruption, and the growing pressure of the western countries. Despite this fact, among the economic benefits of the USSR was the existence of five-ear planning system, which enforced its industrial development. Similar, it allowed solving the problem of demand by means of fixed prices in relation to wages in such a way to achieve complete utilization of resources (Mazat & Serrano n. d.).
The policy of this conglomerate highlighted several aims, which were set as the priorities of the economic development. Among them were economic growth based on investment, military spending, a level of personal consumption of subsistence and public consumption (Mazat & Serrano n. d.). The command economic system allowed the authorities governing such a big country for a significant amount of time. Nevertheless, the USSR had its decline caused by multiple economic and cultural factors. For instance, one of the drawbacks of the economic development was the priority of military development and the growth of heavy industry rather than light ones (Mazat & Serrano n. d.). Furthermore, the Soviet economic system was depressingly affected by negative demographic trends, poor level of investment, political problems, institutional weakness and inability of the authorities to reach a compromise (Stoner-Weiss & McFaul 2009). Therefore, social tensions and unsuccessful attempts of turning the country into a democratic state caused its breakup. Instead, the newly created governing bodies of the former USSR republics decided to aspire for individual economic and cultural development.
Summarizing the enlisted examples, one concludes that depending on the economic and political situation in the world some economic unities may be more beneficial and preferable to others. Consequently, there is no universal model, which can be applied to any nation or economic unity disregarding the political, economic and social state of its neighbours. This statement is the actual demonstration of the philosophical statement by Heraclitus that everything changes and nothing stands still (Wang, Kohli & Mitra 2015). As a result, the best possible approach is the creation of a flexible social and economic model, which can be changed if needed depending on different factors affecting its unity and integrity. Initially, the formation of the European Union was guided by the policy of diversity and non-obligatory cooperation through economic, social and political integrity.
Causes for Creating the European Union
It is necessary to describe the phenomenon of the European Union in order to provide its further relevant and valid analysis. Thus, the European Union (UE) is a political and economic partnership, which unites sovereign countries through the framework of various integrative policies (Archick 2016). Initially, there were six countries, which decided to share single economic framework in order to resist the economies of the rest of the world and assure the economic stability. Modern EU consists of 28 countries mainly represented by the countries of Central and Eastern Europe. Initially, the EU was formed by a series of binding treaties (Archick 2016), which gradually evolved into a comprehensive set of laws regulating the wide scope of social, political and economic factors.
The need for the formation of such a union was caused by a series of economic reasons. Among them is the historical need for the reunion of the divided parts of Europe as a consequence of post-World War II era (Profile: The European Union 2012). Initially, such attempts were the aim of a merger between the three nations called the European Communities. However, its descendant, the European Union, which was formed in 1991, moved further developing the policies of asylum, immigration, drugs, and terrorism (Profile: The European Union 2012). Thus, initially political and economic reasons were enriched by the need to respond the contemporary threats of the developing world. As a result, the formation of the EU offered a perspective of a having a wide range of benefits for the participants.
The Benefits of the European Union
Enlisting and characterizing the benefits of membership in the EU it is important to identify their political, economic and social importance. Among the economic benefits was the formation of the largest and single market of goods and services which aimed at the establishment of stability and prosperity (Profile: The European Union 2012). These aims were assured by means of the policy of multilateral liberalization, regional integration, and institutional set-up (The European Union’s Trade Policies and their Economic Effects n. d.). Thus, the centralized distribution of resources allowed the participants of the EU sharing different domains without interference along with the possibility of avoiding strict integral competition. Furthermore, the participating countries regarded that the tendency towards integration should be strengthened. As a consequence, a series of treaties established a single currency, Euro, the centralized governing body, and integrated the legal system. Therefore, the main framework for the members of the EU included shared currency, freedom of movement, singe trade market, considerable enlargement and expansion, and common foreign and state security policy (Profile: The European Union 2012).
These changes were estimated as positive because the prices in the EU were lowered due to internal market competition, new jobs generation, economic development of the deprived regions, louder voice and the protection of workers (Advantages and disadvantages of the European Union 2014). Moreover, the policy of integration has affected the free share of scientific knowledge and skilled labour, which boosted the development of scientific and business projects. Similarly, the responsible stakeholders were working hard on paperwork reduction and harmonisation of technical and safety standards, clearer and more efficient legislation, restrictions of administrative pressure for business (Benefits of trading in the European Union n. d.). Thus, throughout its existence, the EU has been constantly modifying its organizational structure in order to assure political stability, predictable economic development, and cultural integration. At the same time, the analysis of its activity demonstrates that this conglomerate has been having various problems.
The Past and Contemporary Problems of the European Union
Despite the development of the European Union during the recent years is steady, from time to time it faced with the challenges of different origin, which negatively affected its progress and integrity. For instance, the economic model of the EU has become less flexible, which was caused by the increased number of members and the need for urgent responses. One of the examples, which demonstrate this fact, is the economic crisis of 2007. Its outcomes for the EU were so significant that its economic growth has been worse than of the US and Japan (Balcerowicz, Rzonca, Kalina & Łaszek 2014). Despite the attempts of adaptation, the EU experienced a deep fall in gross capital formation and poor investment ratio. Furthermore, the slow response of the economy caused the problem with unemployment and poor development of productivity per person (Balcerowicz, Rzonca, Kalina & Łaszek 2014). As a result, this fact demonstrates that the increase of the membership would lead to further deterioration of the situation. Furthermore, certain percent of the population of the EU has been opposing integration and globalization fighting for individual values of each country. In this respect, the claims of the opponents were that political and social unity caused by the loss of national sovereignty would lead to “democratic deficit” where the central governing bodies would distribute resources in an unfair way (Archick 2016).
One of the countries, which still struggle to merge with the EU is the UK, which thoroughly analyzes its perspectives of the complete membership. One of the common claims of the refusal of complete merger is the fact that it would deteriorate the country’s economic progress because of the need for the maintenance of internal regulations (The economic consequences of leaving the EU 2014). Similarly, there are fears about possible unfair trade regulations and the use of the potential of UK for the benefit of saving the economic potential of the EU. Furthermore, various stakeholders claim that despite the EU has a profound framework of regulations it lacks efficacy because “it does too little” (Micossi & Tosato 2009). This negative effect is occasionally achieved by the struggles of political groups, which represent different interests and aspire for totally different goals. The inability to reach compromise restrains the decision-making process and makes the governing bodies and policies of the EU slower in terms of the provision of timely and relevant responses to economic challenges.
Furthermore, it is necessary to consider the contemporary problems of the EU, which affect its integrity. For instance, a recent political and financial crisis in Greece was a challenge for the biggest players of the EU because the country was at risk of leaving the US (Europe in 2015: Uncertain, uneven and unpredictable 2015). Despite the countries have reached the compromise, it is evident that, from time to time, economic and political challenges in the countries-members of the EU lead them to thoughts of discontinuation of membership. In addition, the EU is negatively affected by internal political controversies caused by reaction towards different situations in the world. Moreover, some of these situations lead to economic problems as was the recent case with sanctions against Russia because of the Ukrainian conflict (Europe in 2015: Uncertain, uneven and unpredictable 2015). Thus, despite the policy of the EU is backed up by the US, the tensions with Russia lead to the fact that the EU has lost a considerable part of trade market in this country. Lastly, the EU experiences a problem with refugee migrants caused by the conflict in Syria. Thus, the policy of open borders has turned out to be a threat because of rapid invasion of millions of refugees from Middle East (Park 2015). Therefore, the enlisted examples demonstrate that the EU requires the implementation of reforming policies, which restrain integration and lead the union towards mitigation of contemporary issues. This need is critical because the historical cases of different trade and state unions demonstrate that even the strongest collaborative formations may disassemble because of various external and internal factors.
Summarizing the presented information, the paper comes to a conclusion that the European Union requires development and implementation of the policies, which restrain its integrative processes. This need is critical, and this claim is supported by the analysis of historical and contemporary issues. Thus, the evaluation of such historical conglomerates as the Silk Road and the Soviet Union demonstrate that despite these formations lead the participants towards the economic prosperity they were gradually terminated. This termination was based on various external and internal conditions such as the economic challenge of similar but more efficient formations, inefficient governing policy and others. Likewise, the analysis of the situation in the European Union demonstrates that this conglomerate might be affected by similar issues. Some of them such as the economic crisis of 2007 have already taken place and caused deterioration of the economy of the participants followed by slow restoration. Moreover, the military and political crisis in the world such as Ukrainian conflict and the war in the Middle East have extremely negative outcomes because of the economic, political and social integrity. Initially, this integrity was a benefit, but the changing conditions in the world indicate that the policy of integrations should be restrained. Instead, the members of the EU should implement policies, which would protect the economic and political stability of every separate member.