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Summary Economic aspects of European Integration - 16/20

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Economic aspects of European Integration Chapter 1 to Chapter 13 (without chapter 2 and 3) D0M09a Professor: Dr. Yannick Bormans

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‭Economic aspects of European Integration‬
‭D0M09a‬

‭By: Charlotte Blanchez‬

‭Professor: Dr. Yannick Bormans‬

‭Based on the book - The economics of european integration Seventh Edition and the slides‬

‭1‬

,‭Chapitre‬‭1‬‭→‬‭History‬‭............................................................................................................‬‭10‬
‭1.‬‭Early‬‭post‬‭war‬‭period‬‭1945-50‬‭......................................................................................‬‭10‬
‭1.1.‬‭Death,‬‭destruction‬‭and‬‭upheaval‬‭.........................................................................‬‭10‬
‭1.2.‬‭A‬‭climat‬‭for‬‭radical‬‭change‬‭and‬‭the‬‭prime‬‭question‬‭.............................................‬‭10‬
‭1.3.‬‭The‬‭beginning‬‭of‬‭the‬‭cold‬‭war‬‭..............................................................................‬‭10‬
‭1.4.‬‭Marshall‬‭Plan‬‭........................................................................................................‬‭11‬
‭2.‬‭Make‬‭Europe‬‭not‬‭war:‬‭ECSC,‬‭EEC‬‭and‬‭EFTA,‬‭1951-60‬‭...............................................‬‭11‬
‭2.1.‬‭Towards‬‭an‬‭economically‬‭strong‬‭and‬‭rearmed‬‭West‬‭Germany‬‭............................‬‭11‬
‭2.2.‬‭European‬‭Free‬‭trade‬‭association‬‭(EFTA)‬‭.............................................................‬‭12‬
‭2.3.‬‭The‬‭Federalism‬‭vs‬‭intergovernmentalism‬‭schism‬‭................................................‬‭12‬
‭2.4.‬‭European‬‭integration‬‭gains‬‭economic‬‭motivations‬‭...............................................‬‭13‬
‭3.‬‭Evolution‬‭two‬‭concentric‬‭circles‬‭....................................................................................‬‭13‬
‭3.1.‬‭First‬‭enlargement,‬‭EEC–EFTA‬‭FTAs‬‭and‬‭the‬‭domino‬‭effect‬‭I‬‭..............................‬‭13‬
‭4.‬‭Delayed‬‭trade‬‭integration,‬‭accelerated‬‭monetary‬‭integration:‬‭in‬‭1970‬‭..........................‬‭14‬
‭4.1.‬‭Euro-pessimism‬‭1.0:‬‭the‬‭1970s‬‭............................................................................‬‭14‬
‭5.‬‭Depper‬‭circles‬‭and‬‭the‬‭domino‬‭effect‬‭part‬‭2‬‭:‬‭The‬‭single‬‭market‬‭programme‬‭..............‬‭14‬
‭5.1.‬‭Jacques‬‭Delors‬‭....................................................................................................‬‭14‬
‭5.2.‬‭The‬‭singles‬‭market‬‭programme‬‭...........................................................................‬‭14‬
‭6.‬‭Reuniting‬‭East‬‭and‬‭West‬‭Europe‬‭..................................................................................‬‭15‬
‭6.1.‬‭Communism’s‬‭creeping‬‭failure‬‭and‬‭spectacular‬‭collapse‬‭....................................‬‭15‬
‭6.2.‬‭First‬‭steps:‬‭The‬‭europe‬‭agreements‬‭....................................................................‬‭16‬
‭6.3.‬‭Preparing‬‭the‬‭Eu‬‭for‬‭Eastern‬‭enlargement‬‭...........................................................‬‭16‬
‭7.‬‭Monetary‬‭Union‬‭.............................................................................................................‬‭16‬
‭7.1.‬‭German‬‭unification‬‭and‬‭renewed‬‭push‬‭for‬‭integration‬‭.........................................‬‭16‬
‭7.2.‬‭From‬‭ratification‬‭difficulties‬‭to‬‭the‬‭introduction‬‭of‬‭the‬‭euro‬‭...................................‬‭17‬
‭8.‬‭Global‬‭and‬‭Eurozone‬‭crises‬‭and‬‭institutional‬‭response‬‭................................................‬‭17‬
‭9.‬‭Euroscepticisme‬‭2.0‬‭......................................................................................................‬‭18‬
‭10.‬‭Brexit‬‭...........................................................................................................................‬‭18‬
‭10.1.‬‭The‬‭long,‬‭difficult‬‭and‬‭messy‬‭Brexit‬‭negotiations‬‭...............................................‬‭18‬
‭11.‬‭The‬‭covid‬‭19‬‭pandemic‬‭...............................................................................................‬‭19‬
‭12.‬‭The‬‭europe‬‭green‬‭deal‬‭................................................................................................‬‭19‬
‭Chapter‬‭2‬‭→‬‭Facts,‬‭Law,‬‭Institutions‬‭and‬‭the‬‭Budget‬‭.......................................................‬‭21‬
‭1.‬‭Economic‬‭integration‬‭in‬‭the‬‭EU‬‭.....................................................................................‬‭21‬
‭2.‬‭EU‬‭architecture‬‭.............................................................................................................‬‭21‬
‭3.‬‭EU‬‭Law‬‭The‬‭big‬‭5‬‭institutions‬‭.......................................................................................‬‭21‬
‭4.‬‭Legislative‬‭process‬‭.......................................................................................................‬‭21‬
‭5.‬‭Some‬‭important‬‭facts‬‭....................................................................................................‬‭21‬
‭6.‬‭The‬‭budget‬‭....................................................................................................................‬‭21‬
‭Chapitre‬‭3‬‭→‬‭Decision‬‭Making‬‭............................................................................................‬‭21‬
‭1.‬‭Task‬‭allocation‬‭and‬‭subsidiarity:‬‭EU‬‭practice‬‭and‬‭principles‬‭.........................................‬‭21‬
‭2.‬‭Understanding‬‭the‬‭task‬‭allocation:‬‭the‬‭theory‬‭of‬‭fiscal‬‭federalisme‬‭..............................‬‭21‬
‭3.‬‭Economic‬‭view‬‭of‬‭decision‬‭making‬‭...............................................................................‬‭21‬
‭4.‬‭The‬‭distribution‬‭of‬‭power‬‭among‬‭EU‬‭members‬‭.............................................................‬‭21‬

‭2‬

, ‭5.‬‭Legitimacy‬‭in‬‭EU‬‭decision‬‭making‬‭................................................................................‬‭21‬
‭Chapter‬‭4‬‭→‬‭Essential‬‭microeconomic‬‭tools‬‭and‬‭tariff‬‭analysis‬‭.....................................‬‭22‬
‭1.‬‭Introduction‬‭...................................................................................................................‬‭22‬
‭2.‬‭Preliminaries‬‭I:‬‭supply‬‭and‬‭demand‬‭diagrams‬‭..............................................................‬‭22‬
‭3.‬‭Welfare‬‭analysis:‬‭consumer‬‭and‬‭producer‬‭surplus‬‭.......................................................‬‭22‬
‭4.‬‭Preliminaries‬‭II‬‭..............................................................................................................‬‭23‬
‭4.1.‬‭Import‬‭demand‬‭curve‬‭...........................................................................................‬‭23‬
‭4.2.‬‭Export‬‭Supply‬‭curve‬‭.............................................................................................‬‭24‬
‭5.‬‭MFN‬‭tariff‬‭analysis‬‭........................................................................................................‬‭25‬
‭5.1.‬‭Welfare‬‭effects‬‭of‬‭a‬‭tariff‬‭......................................................................................‬‭25‬
‭5.2.‬‭Tariffs‬‭as‬‭a‬‭tax‬‭on‬‭foreigners‬‭................................................................................‬‭26‬
‭6.‬‭Economic‬‭justice‬‭and‬‭efficiency‬‭....................................................................................‬‭26‬
‭7.‬‭Analysis‬‭of‬‭Global‬‭Value‬‭Chains‬‭(GVCs)‬‭......................................................................‬‭27‬
‭8.‬‭Types‬‭of‬‭protection‬‭........................................................................................................‬‭28‬
‭9.‬‭Sources‬‭of‬‭competitiveness‬‭differences‬‭........................................................................‬‭28‬
‭10.‬‭Intra‬‭Industry‬‭trade‬‭......................................................................................................‬‭29‬
‭Chapter‬‭5‬‭→‬‭The‬‭essential‬‭economics‬‭of‬‭preferential‬‭liberalization‬‭...............................‬‭30‬
‭1.‬‭Analysis‬‭of‬‭unilateral‬‭discriminatory‬‭liberalization‬‭.........................................................‬‭30‬
‭1.1.‬‭The‬‭RTA‬‭diagram‬‭.................................................................................................‬‭30‬
‭1.2.‬‭Discriminatory‬‭liberalization‬‭.................................................................................‬‭31‬
‭1.3.‬‭Supply-switching‬‭effects‬‭of‬‭EEC‬‭customs‬‭union‬‭..................................................‬‭31‬
‭1.4.‬‭Welfare‬‭effects‬‭.....................................................................................................‬‭32‬
‭4.1.1.‬‭Excurus:‬‭Home‬‭welfare‬‭effects‬‭in‬‭more‬‭detail‬‭...................................................‬‭33‬
‭5.‬‭Analysis‬‭of‬‭a‬‭customs‬‭union‬‭.........................................................................................‬‭33‬
‭5.1.‬‭Price‬‭and‬‭quantity‬‭effects:‬‭....................................................................................‬‭34‬
‭5.2.‬‭Welfare‬‭effects‬‭.....................................................................................................‬‭34‬
‭5.3.‬‭Analysis‬‭of‬‭a‬‭CU:‬‭welfare‬‭effects‬‭in‬‭detail‬‭............................................................‬‭34‬
‭5.4.‬‭Customs‬‭unison‬‭vs‬‭free‬‭trade‬‭agreements‬‭..........................................................‬‭35‬
‭6.‬‭Frictional‬‭barriers:‬‭the‬‭singles‬‭market‬‭...........................................................................‬‭35‬
‭6.1.‬‭Price‬‭and‬‭Quantity‬‭effects‬‭....................................................................................‬‭35‬
‭6.2.‬‭Welfare‬‭effects‬‭.....................................................................................................‬‭36‬
‭7.‬‭“Deep”‬‭trade‬‭arrangements‬‭...........................................................................................‬‭36‬
‭8.‬‭WTO‬‭Rules‬‭....................................................................................................................‬‭37‬
‭Chapter‬‭6‬‭→‬‭Market‬‭size‬‭and‬‭scale‬‭effects‬‭........................................................................‬‭38‬
‭1.‬‭Introduction‬‭...................................................................................................................‬‭38‬
‭1.1.‬‭Illustration:‬‭The‬‭effects‬‭of‬‭brexit‬‭...........................................................................‬‭38‬
‭2.‬‭Liberalization,‬‭defragmentation‬‭and‬‭industrial‬‭restructuring‬‭.........................................‬‭38‬
‭2.1.‬‭The‬‭logic‬‭...............................................................................................................‬‭38‬
‭2.2.‬‭Empirical‬‭evidence‬‭...............................................................................................‬‭39‬
‭3.‬‭The‬‭BE–COMP‬‭diagram‬‭in‬‭a‬‭closed‬‭economy‬‭.............................................................‬‭39‬
‭3.1.‬‭The‬‭equilibrium‬‭prices,‬‭output‬‭and‬‭firm‬‭size‬‭.........................................................‬‭40‬
‭4.‬‭The‬‭impact‬‭of‬‭European‬‭Integration‬‭..............................................................................‬‭40‬
‭4.1.‬‭Welfare‬‭effects‬‭.....................................................................................................‬‭41‬
‭Chapter‬‭8‬‭→‬‭Economic‬‭integration,‬‭labour‬‭markets‬‭and‬‭migration‬‭................................‬‭42‬

‭3‬

, ‭ .‬‭European‬‭labour‬‭markets:‬‭a‬‭brief‬‭characterization‬‭.......................................................‬‭42‬
1
‭2.‬‭Labour‬‭markets:‬‭the‬‭principles‬‭......................................................................................‬‭42‬
‭2.1.‬‭Demand‬‭................................................................................................................‬‭42‬
‭2.2.‬‭Supply‬‭..................................................................................................................‬‭43‬
‭2.3.‬‭The‬‭equilibrium‬‭and‬‭unemployment‬‭.....................................................................‬‭43‬
‭2.4.‬‭Labor‬‭markets:‬‭collective‬‭negotiations‬‭.................................................................‬‭44‬
‭2.5.‬‭Long‬‭Term‬‭unemployment‬‭....................................................................................‬‭44‬
‭2.6.‬‭Cyclical‬‭impact‬‭of‬‭wage‬‭rigidity‬‭............................................................................‬‭45‬
‭3.‬‭Effects‬‭of‬‭trade‬‭integration‬‭on‬‭labour‬‭markets‬‭..............................................................‬‭45‬
‭3.1.‬‭Institutional‬‭effects‬‭of‬‭trade‬‭integration‬‭................................................................‬‭45‬
‭3.2.‬‭Social‬‭Dumping‬‭....................................................................................................‬‭46‬
‭4.‬‭Migration‬‭.......................................................................................................................‬‭46‬
‭4.1.‬‭Some‬‭Facts‬‭..........................................................................................................‬‭46‬
‭4.2.‬‭The‬‭simple‬‭economics‬‭of‬‭labour‬‭market‬‭integration‬‭.............................................‬‭47‬
‭4.3.‬‭Broader‬‭interpretation:‬‭complementarity‬‭vs‬‭substitutability‬‭..................................‬‭49‬
‭4.4.‬‭Migration‬‭and‬‭Unemployment‬‭..............................................................................‬‭49‬
‭4.5.‬‭Barriers‬‭to‬‭mobility‬‭...............................................................................................‬‭50‬
‭Chapter‬‭9‬‭→‬‭The‬‭common‬‭Agriculture‬‭policy‬‭....................................................................‬‭51‬
‭1.‬‭The‬‭old‬‭simple‬‭logic:‬‭price‬‭supports‬‭..............................................................................‬‭51‬
‭1.1.‬‭The‬‭simple‬‭old‬‭logic:‬‭The‬‭food‬‭tax‬‭and‬‭subsidy‬‭interpretation‬‭.............................‬‭52‬
‭1.2.‬‭Farm‬‭size,‬‭efficiency‬‭and‬‭distribution‬‭of‬‭farmer‬‭benefits‬‭......................................‬‭52‬
‭1.3.‬‭The‬‭simple‬‭logic‬‭of‬‭‘pay‬‭for‬‭good‬‭behaviour’‬‭........................................................‬‭53‬
‭2.‬‭Changes‬‭circumstances‬‭and‬‭CAP‬‭problems‬‭................................................................‬‭54‬
‭2.1.‬‭Changed‬‭circumstances‬‭and‬‭CAP‬‭problems:‬‭budget‬‭..........................................‬‭55‬
‭2.2.‬‭Changed‬‭circumstances‬‭and‬‭CAP‬‭problems:‬‭farm‬‭income‬‭..................................‬‭55‬
‭2.3.‬‭Changed‬‭circumstances‬‭and‬‭CAP‬‭problems:‬‭CAP‬‭paradox‬‭................................‬‭55‬
‭2.4.‬‭Changed‬‭circumstances‬‭and‬‭CAP‬‭problems:‬‭Industrialization‬‭of‬‭farming‬‭...........‬‭56‬
‭3.‬‭The‬‭simple‬‭economic‬‭logic‬‭of‬‭CAP‬‭reform‬‭....................................................................‬‭56‬
‭3.1.‬‭Price‬‭cuts‬‭compensated‬‭by‬‭‘decoupled‬‭direct‬‭payments’‬‭....................................‬‭57‬
‭4.‬‭CAP‬‭reform‬‭&‬‭Todays‬‭CAP‬‭...........................................................................................‬‭57‬
‭Chapter‬‭10‬‭→‬‭Location‬‭effects,‬‭economic‬‭geography‬‭and‬‭regional‬‭policy‬‭....................‬‭58‬
‭1.‬‭Europe's‬‭economic‬‭geography‬‭......................................................................................‬‭58‬
‭1.1.‬‭The‬‭facts‬‭..............................................................................................................‬‭58‬
‭2.‬‭Theory‬‭part‬‭1:‬‭Comparative‬‭advantages‬‭.......................................................................‬‭59‬
‭3.‬‭Theory‬‭part‬‭2:‬‭Agglomeration‬‭and‬‭the‬‭new‬‭economic‬‭geography‬‭................................‬‭60‬
‭3.1.‬‭The‬‭locational‬‭effects‬‭of‬‭European‬‭integration:‬‭a‬‭simple‬‭model‬‭...........................‬‭60‬
‭3.2.‬‭The‬‭locational‬‭effects‬‭of‬‭tighter‬‭European‬‭integration‬‭..........................................‬‭60‬
‭3.3. The locational effects of European integration: considering additional‬
‭complicating‬‭factors‬‭....................................................................................................‬‭61‬
‭4.‬‭Theory‬‭part‬‭3:‬‭Putting‬‭it‬‭all‬‭together‬‭..............................................................................‬‭61‬
‭5.‬‭Eu‬‭regional‬‭policy‬‭..........................................................................................................‬‭62‬
‭Chapter‬‭11‬‭→‬‭EU‬‭competition‬‭and‬‭state‬‭aid‬‭policy‬‭...........................................................‬‭63‬
‭1.‬‭The‬‭economics‬‭of‬‭anti‬‭competitive‬‭behavior‬‭and‬‭state‬‭aide‬‭.........................................‬‭63‬
‭1.1.‬‭The‬‭economics‬‭of‬‭anti-competitive‬‭behaviour‬‭......................................................‬‭63‬

‭4‬

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