European Integration and the Functioning of Product Markets

European Integration and the Functioning of Product Markets

Edited by Adriaan Dierx, Fabienne Ilzkovitz and Khalid Sekkat

The book reveals that European product market integration has a significant impact on the conditions of competition, the strategies of companies and the structure of industry. It adds a quarter of a percentage to annual GDP growth rates and has not led to an increased exposure of the EU to asymmetric shocks. However, the book argues that further improvements in the functioning of European product markets are needed in order to improve the EU’s growth performance over the next decade. Invaluably, the book provides not only current information about Europe’s achievements in economic integration but also methodology to assess the outcome of economic integration in other regions of the World, such as NAFTA, MERCOSUR and ASEAN.

Chapter 8: Product market integration and EU exposure to euro/dollar fluctuations

Adriaan Dierx, Fabienne Ilzkovitz and Khalid Sekkat

Subjects: economics and finance, industrial economics


8. Product market integration and EU exposure to euro/dollar fluctuations Adriaan Dierx, Fabienne Ilzkovitz and Khalid Sekkat* INTRODUCTION The process of European integration in the past decade has been closely associated with the Single Market Programme (now evolved into the Internal Market Strategy) and Economic and Monetary Union. This process has been pushed forward by highly publicised deadlines and target dates (1992 for the SMP, 1999 and 2002 for EMU) giving a first impression of abrupt change in the economic environment. In practice, however, businesses and consumers tend to anticipate such change and modify their behaviour even before the formal change is made. On the other hand, often the full impact of the economic reforms is felt only years after their introduction. This implies that European integration is a continuous process, one in which the speed of progress may be affected by policy initiatives such as the SMP and EMU and which takes place in conjunction with other events influencing the behaviour of economic agents and the performances of the economy, such as globalisation or the ICT revolution. Moreover, while at a superficial level the timing of these key policy initiatives may appear to coincide between EU Member States, in practice it can be quite different. Some Member States for instance have received temporary derogations on key elements of the Single Market Programme. Others have experienced serious delays in implementing all its provisions. Also, the SMP does not concern all sectors equally or simultaneously. To the extent that...

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