Problems of Growth and Stability
Edited by Pier Carlo Padoan, Paul A. Brenton and Gavin Boyd
Chapter 8: Industry and finance in the EU: integration, enlargement and economic performance
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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