The Structural Foundations of International Finance

The Structural Foundations of International Finance

Problems of Growth and Stability

New Horizons in International Business series

Edited by Pier Carlo Padoan, Paul A. Brenton and Gavin Boyd

The Structural Foundations of International Finance examines the ways in which national economies, especially those of industrialized countries, are affected by the operations of international financial markets. Although these markets provide productive funding, there is also much speculative trading in stocks and currencies which can cause booms, slumps and hinder recovery. The authors advocate entrepreneurial coordination by productive enterprises for balanced and stable growth, with reduced risks of financial crises and recessions.

Chapter 8: Industry and finance in the EU: integration, enlargement and economic performance

Paul A. Brenton

Subjects: business and management, international business, economics and finance, financial economics and regulation, international economics


Paul A. Brenton EU policymakers have become convinced that the relatively poor economic performance of European economies in relation to that of the USA during the 1990s is a reflection of severe gaps in the completion of the single market in Europe. Enhancing the degree of market integration between European economies is seen as a key element in achieving the rather ambitious objective defined at the Lisbon Summit of making the EU the most competitive and cohesive place in the world to live and to do business by the year 2010. At the forefront of this drive towards competitiveness in Europe will be the increasing integration of financial services and network service industries. The lack of a deep European financial market is perceived, in particular, to have constrained the funding for European high technology companies and new business start-ups in relation to the USA.1 Increasing financial integration, while bringing significant economic benefits in its own right, is also seen as important in allowing the benefits of a single European market in goods to be fully attained. But goods markets too are far from perfectly integrated and further economic gains, in terms of higher productivity, greater exploitation of economies of scale and increased consumer choice, are expected from the more effective implementation of EU initiatives that seek to ensure the freedom of movement of goods throughout the EU. In this chapter we consider the EU approach to the integration of both goods and financial markets, examine the reasons why national markets...

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