Extract

Even though the euro area and the OECD countries more generally have been caught up in a period of low growth and even crisis for some time now, it is also important to keep an eye on other, more dynamic parts of the world in the process of analysing European integration. One of the key defining trends of the past two decades in the global economy has been the emergence of China. Chinese manufacturing goods are competing at higher and higher levels of sophistication, and the effects are being felt all over Europe and the rest of the world. At the same time, Russia’s economic growth has also been impressive, and the country has become even more important for those in Europe. Russia is particularly important as a source of energy and its growing standards of living have enabled many countries – including Finland – to export more there. Furthermore, we should not forget that other emerging markets and developing countries succeeded in growing at a rapid pace during recent years and even decades. During the ‘Great Recession’ the largest emerging market economies continued to grow, while advanced OECD countries contracted. According to IMF forecasts, the economic size – adjusted for purchasing power parities – of emerging and developing economies will exceed that of the advanced countries as early as 2012 (see Figure 2.1). This rapid change continues to affect the Central and Eastern European economies as well, whether they are inside the EU or not. While this is a significant shift in the balance of economic activity in the world, we need to also remember that we are witnessing a return to the situation that persisted for most of the past two millennia. China accounted for more than one quarter of global output until the beginning of the nineteenth century, and the country is now on its way to a similar share of total output (see Figure 2.2).