Is Europe likely to catch up with the US

Is Europe likely to catch up with the US?

The European Union has gone through a number of different stages of economic integration since the late 1950s. Having started as a Free Trade Area the process of globalisation increased the need of further integration and led to a rapid development in the 1990s. Although a partial union is achieved with the Euro as the common currency in 12 of the 25 member states adequate competitiveness on the global market has still to be gained. To reach the level of the US economy urging on the world market, more harmonisation within the EU is of necessity.

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As the tables show, when comparing recent economic performance of the European Union with the US, the gap between those regions is still of great importance. The economy of the US has developed at a much greater pace in the last few years due to their dynamism and flexibility. In terms of economic growth the US managed to develop much faster since the 1970s than the EU and widened the gap particularly from 1993 to 2000. However some countries in the EU for example Ireland have had a strong increase in growth. This is also true for trade. Ireland and some less open countries like Finland or Spain have seen a significant evolution of trade whereas export and import of the whole of the EU grew slower than of the US. Nevertheless exports and imports of goods and services rose in the EU during the 1990s when the Single Market was introduced. On the contrary, inflows of foreign direct investment, usually related to trade, have declined during this period. This stands in contrast to the rise of inflows of FDI into the US during that time. Flows of FDI within the EU becoming of less importance can be seen as a positive effect of economic integration. Apart from this some of the expected benefits of economic integration leading to economies of scale seem to have occurred. Not only have the numbers of mergers and acquisitions more than doubled but also some …

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