ADVANTAGES AND DISADVANTAGES
advantages
FOR INTERNATIONAL TRADE.
-Specialization is encouraged. Each European region can specialize in those sectors in which it is most endowed. This will contribute to a higher production and better quality, and an increase in productivity.
-Administrative and bureaucratic costs are reduced. Customs not only mean an increase in costs when paying tariffs. They also represent a series of bureaucratic obstacles that hinder international trade. With the elimination of customs in the European Union, trade flows more easily.
For the creation of large companies.
Economies of scale are favored: companies that need high technology have large fixed, structural costs. These costs could not be compensated by sales in the markets of each of the member countries, because they are too small individually. On the other hand, the European Union as a whole has a market of almost half a million inhabitants.
-The European Union represents an area of regional integration that favors cooperation agreements between member countries. Observe the example of the particle accelerator (cited in the curiosity section). Another example is the Airbus consortium, in which large European airlines participate.
-The single currency eliminates the risks of exchange rate: the monetary union favors companies to settle in any country of the euro zone without fear of losing profits due to the effect of devaluations.
To advance in political and economic fields.
-The Euro Zone forces the member countries to adopt greater discipline in the economic field: the states that are part of the single currency must present balanced economic indicators.
-The European Union supposes, in many fields, the harmonization of national legislations. This often leads to adopt the most evolved models in the areas in which the legislation is unified (education, taxation, finance ...)
-The European Union strengthens the position of its member nations in the international arena. Negotiating with the European Union means negotiating with the greatest economic power in the world.
mobility of citizens of the eu.
-They can travel more easily between member countries. This not only supposes an advantage in the recreational terrain, it also increases the possibilities of training.
-The labor market is favored: workers can travel to those countries where there are offers.
disadvantages
REGIONAL CONCENTRATION OF CAPITAL.
You have studied how international trade favors capital-intensive areas, which attract large investments. The periphery is doomed to develop less profitable sectors. The gap between some regions and others, far from being reduced, may widen. In the European Union, the demographic and industrial axis is framed, above all, in what is called the Great Dorsal. It would be born in the regions of the Southeast of Great Britain, would cross the Benelux, France and Germany and would have its end in the north of Italy.
The periphery would correspond to the southern and eastern regions, highlighting, significantly, the southeastern states because of their scarce income in relation to the rest. The European Union recognizes the need to promote the development of these peripheral regions. For this, they are granted structural funds.
creation of large companies
The European Union promotes big business. His power is excessive. An economic area of the size of the European Union promotes the creation of large economic-financial conglomerates.
This is not negative by itself. In fact, a large capital is needed to undertake the investments demanded by the cutting-edge technology sectors. It is necessary that European companies are present in sectors such as the pharmaceutical, computer or telecommunications industry. And only large companies can compete in these areas.
The problem of creating large transnational empires is that they can lead to monopolistic practices that limit or cancel free competition. On the other hand its economic weight is of such caliber that it confers an excessive power to them.
loss of sovereignty.
In the European Union, the division of powers is not clear. This is because the European Parliament does not have the competences of national parliaments. Its legislative functions are still rickety. Until this is changed, the representatives of the citizens of the Union, elected by universal suffrage, have a residual function.
trade diversion.
You have studied that it is a problem of regional integration. Integration favors the nations that are part of it, but harms the rest of the states that are not part of the process. Remember the example of the relationship of Spain with Latin America before and after 1986.