Assoc. Prof.

Laura Elena MARINAS, PhD

Dept. for International Business and Economics
laura.marinas@rei.ase.ro

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 Lectures and discussions on:
◦ Basic concepts and theories of economic and monetary
regional integration
◦ History of European economic integration
◦ EU regulatory and institutional fraemwork. Decision making
in the European Union.
◦ EU single market
◦ Economic and monetary union. The Stability and Growth
Pact.
◦ EU competition and cohesion policies
◦ Common Agricultural Policy
◦ Environemntal policy
◦ EU competitiveness, inovation and development tools and
strategy
◦ EU enlargement policy

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 Laura Elena Marinas, European economic
integration – Reader and ppt presentations,
2016;
 Baldwin R., Wyplosz C., ”The Economics of
European Integration”, McGraw Hill Higher
Education. 2010
 De Grauwe, P., “Economics of Monetary
Union”, Oxford University Press, 2012
 Pelkmans J., ”European Integration: Methods
And Economic Analysis”, 3rd eds. inancial
Times/Prentice Hall, 2006.
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Final grade will be assigned as follows:
-final exam: 60%
-seminars: 40%
◦ participation, assignments and exercises: 20%
◦ essay: 20%

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 Microenomic vs. Macroeconomic
 Static view vs. Dynamic view
 Positive integration (pro active approach,
harmonization of policies etc.) vs. Negative
integration (liberalization, removal of
barierrs etc.). Both targeting freedoms of
movements and harmonization
 Deeper integration vs. enlargement

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 “economic integration” is mainfold:
◦ refers to the absorption of a company in a larger
concern (e.g. Dacia - Renault)
◦ refers to the integration of regional economies in a
national one (has a spatial aspect)
◦ related to international economic relations,to
indicate the combination of the economies of
several sovereign states in one entity (EU).
 Economic integration is not an objective in
itself, but serves higher objectives:

◦ Economic, objective (immediate objective):

 to raise the prosperity of all cooperating units.
◦ Peace policy (farther-reaching objective):
 to lessen the chance of armed conflicts among
partners.
 Two or more countries when they
reduce their respective duties on
imports of all goods (except
services of capital) from each
other, retaining their original
tariffs against the outside world

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 Two or more countries when they remove
import duties and quantitative restrictions in
their mutual trade in all goods (except
services of capital); maintaining country
based tarrifs against third parties

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 Two or more countries remove import duties
on their mutual trade in all goods and
or/services (and, in addition, adopt a
common external against third parties

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 Custom union + freedoms of movements
(goods, services, captials,
workforce/citizens)

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 Common market +common policies
 If common monetary policies and/or
common/single currency added= monetary
union
 If both monetary and economic policies
become common = economic and monetary
union
 If all policies become common (monetary
policy included) = full economic union

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 Economic regional integration = the integration of markets.
 Basic principles:
◦ Free movement of goods and services - the obvious welfare gains
from the liberalisation of product markets are a good economic
reason to start integration with that object.
◦ Free movement of production factors - another basic element of
economic integration (allows optimum allocation of labour and
capital).
 A second argument is that an enlarged market of production
factors favours new production possibilities which in turn
permit new, more modern or more efficient uses of
production factors (new forms of credit, new occupations,
etc.).
 Policy approximation: In an economy which leaves production
and distribution entirely to the market, the elimination of
obstacles to the movement of goods and production factors
among countries would suffice to achieve full economic
integration.
 The static sense of “economic integration”:
◦ a situation in which the national components of a larger economy
are no longer separated by economic frontiers but function
together as an entity.
◦ the static meaning of the expression will apply in full once the
integration process has passed through its’ stages and reached its
object.
◦ elimination of economic frontiers at one moment for all member
states

 The dynamic sense of “economic integration”:

◦ indicates the gradual elimination of economic frontiers among
member states (the abolition of national discrimination), with the
formerly separate national economic entities gradually merging
into a larger whole.
◦ the dynamic interpretation is the more usual.
◦ Gradual elimination of economic frontiers, and member states
merge “step by step”.

◦ the elimination of obstacles
◦ measures taken are often of
the simple “Thou shalt not'
type”: they can be clearly
defined, and once
negotiated and laid down in
treaties, they are henceforth
binding on governments,
companies and private
persons.
 There is no need for
permanent decision-making
machinery.
 Whether these measures are
respected is for the courts to
check, to which individuals
may appeal if they consider
their interests damaged.
Negative Integration:
◦ the creation of equal conditions
for the functioning of the
integrated parts of the economy
◦ It may take the form of vaguely
defined obligations requiring
public institutions to take action,
leaving room for interpretation as
to scope and timing.
◦ May be reversed if the policy
environment changes;
consequence: uncertainty for
private economic agents (who
cannot derive any legal rights
from them)
◦ Is the domain of politics and
bureaucracy rather than law and it
doesn’t present a built-in stimulus
for progress.
◦ Politicians are more likely to opt
for positive rather than negative
integration - progress is slower,
the higher the stage of integration
is.
Positive Integration:
 IMPORTANT: all member states have to
agree upon the issues and measures taken
for policy integration!
 For an efficient policy integration, common
institutions (international organisations) are
created.
 For the higher forms of integration
(common market) the transfer of power
from national to union institutions is
required.
 All forms of integration diminish the freedom
of action of the member states' policy-
makers.
◦ (the higher the form of integration, the greater the
restrictions and loss of national competences).
The higher the integration, the greater the
restrictions
 Information (national competence
unaltered)
 Consultation (national competences
affected)
 Co-ordination (limitation of national
competence)
 Unification (national competence
abolished)
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 Realism – states folllows own interest and
cooperation is possible if it can give states
possibilities to better pursue interest
 Intergovernamentalism – states set up limits
of competences for regional institutions;
pursuit of common goals of security and
economic development, formalization in the
treaties, principle of conferral
 Supranationalism – transfer of decision
making to regional institutions
 Functionalist/neofunctionalist view –
spillover effects

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