The Economic Drivers of European Integration

The Economic Drivers of European Integration – understanding the economic models and the challenges facing further integration

Short presentation of the subject

When tourists travel from one country to another country in Europe, they do not need to change cash into different currencies. This is the fruit from European integration. European integration is the integrations of politics, economics and culture among partly states in Europe. These states share same monetary policy. After the Eurozone formed in 1999, member countries within Eurozone began to share the same currency. They benefited from low transportation cost, transparent price comparison, high quality monetary policy, lower inflation rate etc. Lots of problems used to appear within a country now can be solved across country’s border. Countries become a friendly union and the borders are not as strict as before. For the politicians, they achieved political friendships from this integration. European Union acted as a big family in 2008’s great economic recession though there was huge economics performance gap between countries such as German and Greece. However, there still are some European countries haven’t decided to join in the Eurozone for some reason.

Problem formulated

According to the Optimal Currency Area criteria, Eurozone did not fulfill all of them but most of them. Then it is easily to find out the benefits from European Integration. Trade liberalization is realized by streamlining or elimination of border custom fees. Countries are more likely to trade within European Union than rest of the world for the same product. Same currency leads to a fair comparison between prices when trading. High freedom of labor and capital movement can help both countries experiencing unemployment and countries facing labor shortage to share resources. However, labors are not as mobile as expected. This paper is going to discuss about European Union in terms of the labor migration effect and the optimal currency area criteria. How to stimulate people’s willingness to move from home country to foreign country? What can member countries do to fulfill the criteria of optimal currency union more?


I finished this paper in 2013 Fall during my study abroad to Denmark. I joined conferences with world bank, European union, OECD in Paris and discussed about Euro Zone issues

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