Tutor2u EU Notes

8/7/2019 Tutor2u EU Notes

1/22

GeoffRiley(tutor2u) EuropeanEverLarger

Union

February2011

www.tutor2u.net 1

AnEverLargerUnion

EnlargementoftheEUSingleMarketA2Economics:GlobalandEuropeanContextIssues(GeoffRiley,February2011)

TheMapofEuropeTheEUisnowthelargestintegrated

economicareain

theworld,

accountingfor

morethan30%of

worldGDPand

morethan17%of

worldtrade


2/22


Union

February2011

www.tutor2u.net 2

ExpandingtheSingleMarket FirstExpansion

1973:UK,IrelandandDenmark

MediterraneanSpirit1981:Greece1986:PortugalandSpain

EntryoftheNeutrals1995:Austria,FinlandandSweden

TheBigBang2004:Latvia,Lithuania,Cyprus,Malta,Slovenia,

Slovakia,Estonia,Hungary,CzechRepublic,Poland

2007:BulgariaandRomania

Backwardagrariansectors?


3/22


Union

February2011

www.tutor2u.net 3

Orcountriesandcitiesofdeepcultural

andpoliticalinterest

ManynewEUcountriesoffersurprises


4/22


Union

February2011

www.tutor2u.net 4

Andleadthewaytowardsalow

carboneconomy

BenefitsofEUMembership

TradeandInvestment

FreetradeaccesstoricherEUmarkets

Attractinwardcapitalinvestment

EU

funding Structuralfundsfortransport&environment

Farmsupport(butatlowerratethanOldEU)

Macroeconomicstability

Commitmenttowardsjoiningsinglecurrency

Mustbefullyfledgedmarketeconomiestojoin


5/22


Union

February2011

www.tutor2u.net 5

HowhaveNewEuropenations

performedsinceEUentry?

Therearemanyindicatorswecanlookat:

1. Volume/balanceoftradewithintheEU

2. Economicgrowthratesandcyclicalvolatility

3. Relativeproductivitylevels

4. Relativepercapitaincomes

5. Unemploymentrates

6. Consumerpriceinflation

7. Externaltradeandinvestmentbalances

DiningattheRichMansTableExports of goods and services, annual value Euro billionsSlovakian Exports to the UK

Source: EuroStat

99 00 01 02 03 04 05 06 07 08 09

billions

0.0

0.5

1.0

1.5

2.0

2.5

EUR

(billions)

0.0

0.5

1.0

1.5

2.0

2.5


6/22


Union

February2011

www.tutor2u.net 6

ExportsasashareofGDPPer cent

Exports of goods and services as a share of GDP

United KingdomSlovak Republic

SloveniaCzech Republic

Poland

Source: Reuters EcoWin

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09

2030

40

50

60

70

80

90

100

110

120

130

140

%

2030

40

50

60

70

80

90

100

110

120

130

140

TradeBalanceasshareofGDPBalance of Trade as a share of GDPTrade Balance in Goods and Services

Slovak Republic Czech Republic Estonia United KingdomSource: Reuters EcoWin

00 01 02 03 04 05 06 07 08 09

-30

-25

-20

-15

-10

-5

0

5

10

%

-30

-25

-20

-15

-10

-5

0

5

10


7/22


Union

February2011

www.tutor2u.net 7

OutPacingtheUKonGrowthConstant Prices, Gross domestic product at market prices, 2000=100, Index

Comparing Economic Growth Rates

Poland [c.o.p 1 year] Czech Republ ic [c.o.p 1 year] Uni ted Kingdom [c .o.p 1 year]Source: EuroStat

04 05 06 07 08 09 10 11 12

-5

-4

-3

-2

-1

0

1

2

3

4

5

6

7

Percent

-5

-4

-3

-2

-1

0

1

2

3

4

5

6

7

BalticStateshavebeenvolatileAnnual % change in Real Gross Domestic ProductVolatile Economic Cycles for the Baltic States

Estonia [ar 4 quarters]Lithuania [ar 4 quarters]

Latvia [ar 4 quarters]

04 05 06 07 08 09 10

-20

-15

-10

-5

0

5

10

15

P

ercent

-20

-15

-10

-5

0

5

10

15

LithuaniaEstonia

Latvia


8/22


Union

February2011

www.tutor2u.net 8

InvestmentratiosCapital Investment at Constant Prices, measured as a % of GDP

Increased investment has supported growth

Czech Republic Poland Bulgaria United KingdomSource: Reuters EcoWin

00 01 02 03 04 05 06 07 08 09

15.0

20.0

25.0

30.0

35.0

40.0

45.0

%

15.0

20.0

25.0

30.0

35.0

40.0

45.0

FiatinPoland


9/22


Union

February2011

www.tutor2u.net 9

StrongFDI

Lowbusinesstaxes

Lowbusinesstaxes

LowLabourcosts

LowLabourcosts

GrowingmarketsGrowingmarkets

NewEurope amagnetforFDI

Highlyliterate

population

Lowlandprices

CentralEuropeanLocation

Successofearlyprojects


10/22


Union

February2011

www.tutor2u.net 10

MotorwaysTransport Infrastructure - Total Length of Motorways

Poland Hungary Slovak Republic SloveniaSource: EuroStat

00 01 02 03 04 05 06 07 08 09

200

300

400

500

600

700

800

900

1000

KM

200

300

400

500

600

700

800

900

1000

ImprovementsinProductivityIndex of productivity as % of the EU27 averageLabour Productivity per Person Employed

Czech RepublicEstoniaSlovenia

PolandRomaniaBulgaria

Hungary


95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11

20

30

40

50

60

70

80

90

EU27=100

20

30

40

50

60

70

80

90

Czech Republic

Hungary

Romania

Slovenia

PolandEstonia

Bulgaria


11/22


Union

February2011

www.tutor2u.net 11

GrowthandLivingStandards

Fastergrowth

Higherproductivity

Increasedwages

Risingpercapitaincomes

EstimatedTrendGrowthPotential GDP, percentage change per yearEstimated Trend Economic Growth Rates

Euro ZoneCzech Republic

PolandUnited Kingdom

Source: OECD World Economic Outlook

04 05 06 07 08 09 10 11 120.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

Percent

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5


12/22


Union

February2011

www.tutor2u.net 12

RelativePerCapitaIncomesIndex of GDP per head, purchasing power standard, EU=100

Income convergence for ten new EU members

Czech RepublicHungaryPolandSlovenia

EstoniaSlovak RepublicBulgariaLithuania

LatviaRomania


00 01 02 03 04 05 06 07 08 09 1020

30

40

50

60

70

80

90

100

EU25=100

20

30

40

50

60

70

80

90

100

CatchingupandtakingoverGDP per Capita, purchasing power standard, EU25average = 100Catching Up and Overtaking!

Czech Republic Portugal Greece SloveniaSource: EuroStat

00 01 02 03 04 05 06 07 08 09 10

50

55

60

65

70

75

80

85

90

95

100

EU

25=100

50

55

60

65

70

75

80

85

90

95

100


13/22


Union

February2011

www.tutor2u.net 13

ThePictureonJobsPercentage of the labour force, annual average, source: EurostatUnemployment in selected New Member States

Poland Czech Republic Hungary SloveniaSource: Reuters EcoWin

03 04 05 06 07 08 09 100.0

2.0

4.0

6.0

8.010.0

12.0

14.0

16.0

18.0

20.0

22.0

P

ercent

0.0

2.0

4.0

6.0

8.010.0

12.0

14.0

16.0

18.0

20.0

22.0


14/22


Union

February2011

www.tutor2u.net 14

UnemploymentintheEUUnemployment - % of labour force, seasonally adjusted

Unemployment Rates

UKGermany

SpainPoland

Ireland


05 06 07 08 09 100.02.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

22.0

Percent

0.02.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

22.0

AthirdoftheEuroZone's15.8millionunemployed

areinSpain

InflationAnnual % change in consumer prices (all items)Inflation Rates for Selected new EU States

Hungary Czech Republic Poland Latvia Euro ZoneSource: Reuters EcoWin

04 05 06 07 08 09 10

-5.0

0.0

5.0

10.0

15.0

20.0

P

ercent

-5.0

0.0

5.0

10.0

15.0

20.0


15/22


Union

February2011

www.tutor2u.net 15

EUEnlargementandtheUKeconomy

TradeFlows

FDIFlowsLabour

Migration

TradeExports of goods and services, annual data, current prices, billionUK Exports to some new EU States

PolandSlovakia

HungaryCzech Republic

00 01 02 03 04 05 06 07 08 09

billions

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

GBP(billions)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5


16/22


Union

February2011

www.tutor2u.net 16

UKTradewithPolandAnnual value of trade, billion

UK Trade in Goods and Services with Poland

Imports from Po land Exports to PolandSource: Reuters EcoWin

00 01 02 03 04 05 06 07 08 09

billions

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

GBP(billions)

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

UKTradewithPolandAnnual value of trade, billionUK Trade in Goods and Services with Poland

Imports from Po land Exports to PolandSource: Reuters EcoWin

00 01 02 03 04 05 06 07 08 09

b

illions

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

GBP

(billions)

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

Polandnowtakes

asmanyexports

fromtheUKas

Chinadoes


17/22


Union

February2011

www.tutor2u.net 17

Migration PushandPullFactors

Wages

Welfare

TravelLanguage

Jobs


18/22


Union

February2011

www.tutor2u.net 18

TheMigrationStats

LongTermMigration


19/22


Union

February2011

www.tutor2u.net 19

SupportersofInwardMigration Freshskillsandboosttoinnovation

TwentytwoofBritain's114Nobellaureateswerebornabroad

Tesco,Marks&Spencer,EasyJet,Google,Yahoo!,eBay,YouTubeallfoundedorcofoundedbyimmigrantsortheirfamilies

Migrationisaformoftradeandtherearegainsfromtrade IfyougotoFranceforanoperation,itisclassifiedastrade;ifa

Frenchsurgeoncomeshere,itismigration

Reduceslabourshortages

RemittancesaddtoGNPofnewEurope

Netcontributiontogovernmenttaxrevenues Multiplierandacceleratoreffects

Maycontributetohighertrendgrowth Justifiedongroundsoffreedom,justiceandhumanrights

Opponentsofunrestrictedmigration

Extrawelfareburden

Downwardpressureonrealwagesandjobsfordomesticworkers

Socialpressuresandtensions

Pressureonpropertypricesandhousingrents

Somereportsquestionthesizeofthemacroeconomicbenefitofmigration


20/22


Union

February2011

www.tutor2u.net 20

EntryintotheEUinvolvesacommitmenttojointhesinglecurrencyatsomepoint

Butthetimingisflexible

5newEUstateshavejoinedsince2004

Slovenia,Malta,Cyprus,SlovakiaandEstonia

SomehaveapeggedcurrencyagainsttheEuro

Othersfavourafloatingexchangerate

DecisionsontheEuro

SomehavepeggedtotheEuroLocal exchange rates to the Euro, daily valuePegging to the Euro - Estonia and Latvia


00 01 02 03 04 05 06 07 08 09 10 11

0.500

0.550

0.600

0.650

0.700

EUR/LVL

0.500

0.550

0.600

0.650

0.700 Latvian currency

15.620

15.630

15.640

15.650

15.660

EUR/EEK

15.620

15.630

15.640

15.650

15.660


21/22


Union

February2011

www.tutor2u.net 21

Poland currencydepreciationTop Pane: Real GDP Bottom Pane: Effective Exchange Rate Index

Poland - Growth of Real GDP and the Exchange Rate

Poland, Real GDP, precentage change from previous period, Constant PricesEffective Exchange Rate Index


Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct

06 07 08 09 10

85

9095

100

105

110

115

120

125

130

Index

85

9095

100

105

110

115

120

125

130

0

1

2

3

4

5

6

7

Percent

0

1

2

3

4

5

6

7

AneverwiderEurope?Orrisksof

enlargementfatigue?

Iceland Croatia Macedoniaand

Montenegro

BosniaandHerzegovina Serbia Kosovo Turkey Ukraine,Georgia

orTunisia?


22/22


Union

February2011

Enlargement AWorkinProgress Enlargement oneofEUsgreatestsuccesses NewEuropewasvulnerabletotheglobaland

Europeanfinancialcrisis

ButmanycountrieshaveoutperformedoldEuropesince2007onavarietyofindicators

TheyhaveprovidedfreshdynamismintotheEU Europeneedsit!Since2005,Britain'seconomyhas

grownby2%,theEuroZone'sby4%,Brazil'sby25%,

India'sby47%andChina'sby69% Thepoliticalsignificanceofenlargementcannotbeunderestimated

MoreresourcesontheEUfromtheTutor2ublog

Date post:	08-Apr-2018
Category:	Documents
Upload:	ummywicked
View:	227 times
Download:	0 times

Tutor2u EU Notes

Documents