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Introduction.
First of all, I will explain in short about EU, The EU currently consists
of 27 members (independent countries).
The EU was formed through many steps the process started in late
50’s whereby it was set up with the aim of ending the frequent and
bloody wars between neighbours, which culminated in the Second
World War.
Main body.
The following are the 15 elements and their explanations that I will
consider as a member of a government of a nation currently
considering the benefits that EU membership may provide for my
nation.
2. Free trade
• Country A can produce 1000 parts per hour with 200 workers.
• Country B can produce 2500 parts per hour with 200 workers.
• Country C can produce 10000 parts per hour with 200 workers.
Considering that labor and material costs are all equivalent, Country
C has the absolute advantage over both Country B and Country A
because it can produce the most parts per hour at the same cost as
other nations. Country B has an absolute advantage over Country A
because it can produce more parts per hour with the same number of
employees. Country A has no absolute advantage because it can't
produce more goods than either Country B or Country C given the
same input
Assume that there are only two goods, cars and computers, and one
productive resource which is some composite of land, labor, and
capital. Assume also that producing 100 cars requires two units of the
productive resource (PR) in the United Kingdom and four units in
Brazil, and producing 1,000 computers requires three units of PR in
the United Kingdom and four in Brazil.
Thus: U.K BRAZIL
100 cars 2 4
1000 computers 3 4
This makes life difficult for cotton farmers in poorer countries because
they are uncertain from year to year how much of their cotton will be
bought.
5. Barriers to trade
Tariffs, these can also be called customs duties and are the most well
know barrier. They act in exactly the same way as tax by artificially
raising the price of foreign products as they enter the country.
For example in China complete vehicles attract tariffs of 25% of the
price of car imported so if manufactures want to avoid the tariff, they
have to buy parts locally.
Recently the EU has launched its strategy of promoting trade and the
strategy has targeted, inter alia,
• Smart and green growth (in particular in terms of limiting
greenhouse emission and encouraging renewable
energies and energy efficiency)
• Job creation (employment rate should increase from the
current 69% to at least 75% by 2020
• Boosting innovation and the digital economy (investing
3% of GDP in R&D)
• Higher education, training and lifelong learning, and
• Poverty reduction in Europe ( lifting over 20 million people
out of poverty)
8. Balance of payment
This is a measure of the extent of trade between one country and the
rest of the world. This trade is referred to as imports and exports,
which in balance of payments accounting is looked at in terms of the
change of ownership of resources linked to the payment for the
change of ownership.
Figures for the Balance of Payments on Current Account for the UK:
2001 - 2003.
Source: http://www.statistics.gov.uk/pdfdir/bop0903.pdf
Reproduced under license from HMSO
The final part of the balance of payments is the capital account. This
records the transfers of funds. They might include foreign aid, funds
brought by migrants to the UK, money received from the EU Regional
Fund and funds from the purchase and sale of assets and liabilities
including so called 'debt forgiveness'.
Current account
ADVANTAGES
Advice to young people: You can go on holiday and not have to worry
about getting your money changed, therefore avoiding high
conversion charges
DISADVANTAGES
Loss of Sovereignty.
On the political side, it is argued that an independent central bank is
undemocratic. Governments must be able to control the actions of the
central banks because Governments have been democratically
elected by the people, whereas an independent central bank would
be controlled by a non elected body. Moreover, there would be a
considerable loss of sovereignty. Power would be transferred from
London to Brussels. This would be highly undesirable because
national governments would lose the ability to control policy. It would
be one more step down the road towards a Europe where Brussels
was akin to Westminster and Westminster akin to a local authority.
12.EFFECTS OF SINGLE CURRENCY ON
INDIVIDUALS AND ON BUSINESS
Since that trade and everything else should operate more effectively
and efficiently with the Euro. Single currency in a single market
seems to be the way forward.
It provides simplicity to the firms/business as they do not have to
worry about the drop of value of money due to exchange as they can
trade using the single currency.
Conflicts of interest
A commercial enterprise seeking profit optimization pursues its own
corporate objectives such as achieving an acceptable rate of return
on invested capital, gaining market share, or ensuring its long term
competitiveness, rather than supporting the host country's economic
and social development objectives. The result is that corporations
and host country authorities have diverging opinions on very
fundamental issues:
There are other potential areas of conflict that differ from company to
company and country to country. Solving such conflicts requires a
serious evaluation of the interests of and benefits to both parties,
taking the overall social and economic benefit of a company and
product concerned into consideration. There are no universally valid
answers.
Ethical behavior
Corporations that act responsibly in a number of obvious areas
reduce the potential for conflict between a socially and economically
viable development policy and the impact of a corporation's
involvement in a developing country. In this context these are the
minimum requirements for good business practices:
• As far as the consumer is concerned, there should be no
fundamental difference between industrialized and developing
countries in the quality of products and services, their safety and
information for their use (e.g. indications and side-effects of drugs).