Skip to main content
SpringerLink
Log in
Book cover

The Segmentation of Europe pp 37–63Cite as

Palgrave Macmillan

Theoretical Foundations of European Economic Integration

  • Chapter
  • First Online:

  • 437 Accesses

Abstract

This chapter discusses the economic theories underpinning the applied areas examined in further chapters. In particular, it reviews economic thinking in terms of the key aspects of international trade, such as customs union theory and the development of a single internal market regarding the free movement of factors of production, that have driven the post–World War II agenda of regional trade agreements across Europe. Additionally, to complete the move from ‘shallow’ to ‘deep’ regional economic integration, the European Union (EU) has moved to a monetary union, bringing to the fore the theory of optimum currency areas. However, the emphasis of this chapter is on how these paths of economic integration have come under pressure so that it is increasingly evident that not all members of either trade arrangements or the eurozone benefit equally, or indeed at all.

This is a preview of subscription content, log in via an institution.

Bibliography

  • Artis M. and Zhang W. (1995). International Business Cycles and the ERM: Is There a European Business Cycle? CEPR Discussion Paper No. 1191.

    Google Scholar 

  • Artis, M.J., Krolzig, H.-M. and Toro, J. (2004). The European Business Cycle. Oxford Economic Papers, 56, pp. 1–44.

    Article  Google Scholar 

  • Baimbridge, M. and Whyman, P. B. (2008). Britain, the Euro and Beyond. Ashgate, Aldershot.

    Google Scholar 

  • Bank of England. (1989). The Single European Market: Survey of the UK Financial Services Industry. Bank of England, London.

    Google Scholar 

  • Baxter M. and Koupartitas M. (2005). Determinants of Business Cycles Movement: A Robust Analysis. Journal of Monetary Economics, 52, pp. 113–157.

    Article  Google Scholar 

  • Baxter M. and Stockman A.C. (1989). Business Cycles and the Exchange Rate Regime: Some International Evidence. Journal of Monetary Economics, 23(3), pp. 377–400.

    Article  Google Scholar 

  • Bayoumi T. and Eichengreen, B. (1996). Operationalizing the Theory of Optimum Currency Areas, CEPR Discussion Paper Series, No. 1484.

    Google Scholar 

  • Bayoumi, T. and Eichengreen, B. (1993). Shocking Aspects of European Monetary Integration; in Torres, F. and Giavazzi, F. (eds.) Adjustment and Growth in the European Monetary Union. Cambridge University Press, Cambridge.

    Google Scholar 

  • Beine, M., Candelon, B. and Sekkat, K. (2003). EMU Membership and Business Cycle Phases in Europe: Markov-Switching VAR Analysis. Journal of Economic Integration, 18, pp. 214–242.

    Article  Google Scholar 

  • Bergman, U.M. (2004). How Similar Are European Business Cycles? University of Copenhagen, EPRU Working Paper Series, No. 04–13.

    Google Scholar 

  • Bini-Smaghi, L. and Vori, S. (1992). Rating the EC as an Optimum Currency Area: Is It Worse than the US? in O’Brien, R. (ed.) Finance and the International Economy. Oxford University Press, Oxford.

    Google Scholar 

  • Blanchard, O. and Katz, L. (1992). Regional Evolutions. Brookings Papers on Economic Activity, 1, pp. 1–61.

    Article  Google Scholar 

  • Bordo M.D. and Helbling T. (2003). Have National Business Become More Synchronised? NBER Working Paper, No.10130.

    Google Scholar 

  • Bruno, M. and Sachs, J.D. (1985). Economics of Worldwide Stagflation. Blackwell, Oxford.

    Book  Google Scholar 

  • Burkitt, B. and Baimbridge, M. (1990a). Britain, the European Economic Community and the Single Market of 1992: A Reappraisal. Journal of Public Money and Management, 10(4), pp. 57–61.

    Google Scholar 

  • Burkitt, B. and Baimbridge, M. (1990b). The Performance of British Agriculture and the Impact of the Common Agricultural Policy: A Historical Review. Rural History, 1(2), pp. 265–280.

    Article  Google Scholar 

  • Burkitt, B. and Baimbridge, M. (1991). The Cecchini Report and the Impact of 1992. European Research, 2(5), pp. 16–19.

    Google Scholar 

  • Burkitt, B., Baimbridge, M. and Reed, S. (1992). From Rome to Maastricht: A Reappraisal of Britain’s Membership of the European Community. Campaign for an Independent Britain, London.

    Google Scholar 

  • Burkitt, B., Baimbridge, M. and Whyman, P. (1997). A Price Not Worth Paying: The Economic Cost of EMU. Nelson & Pollard, Oxford.

    Google Scholar 

  • Caves, R.E. and Krause, L. (1980). Britain’s Economic Performance. Cambridge University Press, Cambridge.

    Google Scholar 

  • Cecchini, P. (1988). The European Challenge 1992: The Benefits of a Single Market. Wildwood House, Aldershot.

    Google Scholar 

  • Corden, M. (2003). Monetary Integration: The Intellectual Pre-history; in Baimbridge, M. and Whyman, P. (eds.) Economic and Monetary Union in Europe: Theory, Evidence and Practice. Edward Elgar, Cheltenham.

    Google Scholar 

  • Croux, C., Forni, M. and Reichlin, L. (2001). A Measure for Comovement of Economic Variables: Theory and Empirics. Review of Economics and Statistics, 83, pp. 232–241.

    Article  Google Scholar 

  • Cutler, T., Haslam, C., Williams, K. and Williams, J. (1989). 1992 – The Struggle for Europe. BERG Publishers, Oxford.

    Google Scholar 

  • Darvas Z. and Szapary G. (2004). Business Cycle Synchronization in The Enlarged EU: Comovements in The New and Old Members, Central Bank of Hungary Working Paper, No. 2004/1.

    Google Scholar 

  • Davis, E., Kay, J. and Smales, C. (1989). 1992: Myths and Realities. London Business School, London.

    Google Scholar 

  • de Grauwe P. and Mongelli F. (2005). Endogeneities of Optimal Currency Area: What Brings Countries Sharing a Single Currency Closer Together? ECB Working Paper, No.468.

    Google Scholar 

  • EC Commission. (1990). One Money, One Market, European Economy, 44, Office for the Official Publications of the European Communities, Luxembourg.

    Google Scholar 

  • Eichengreen, B. (1990). One Money for Europe? Lessons from the U.S. Currency Union. Economic Policy, 10, pp. 118–187.

    Google Scholar 

  • Eichengreen, B. (1993). European Monetary Unification. Journal of Economic Literature, 31(3), pp. 1321–1357.

    Google Scholar 

  • Eichengreen, B.J. (1997). European Monetary Unification: Theory, Practice, and Analysis. Mit Press Cambridge, MA.

    Google Scholar 

  • Ermisch, J. (1991). European Integration and External Constraints on Social Policy: Is a Social Charter Necessary? National Institute Economic Review, 136(May), pp. 93–108.

    Article  Google Scholar 

  • Fleming, J.M. (1971). On Exchange Rate Unification. Economic Journal, 81, pp. 467–488.

    Article  Google Scholar 

  • Frankel, J. (1999). No Single Currency Regime Is Right for All Countries or at All Times, NBER Working Paper, No.7338.

    Google Scholar 

  • Frankel, J. and Rose, A. (1997). Is EMU More Justifiable Ex-post than Ex-ante? European Economic Review, 41, pp. 753–760.

    Article  Google Scholar 

  • Friedman, M. (1953). The Case for Floating Rates; in Friedman, M. (ed.) Essays in Positive Economics. University of Chicago Press, Chicago.

    Google Scholar 

  • Geroski, P.A. (1989). The Choice Between Diversity and Scale; in Davis, E., Kay, J. and Smales, C. (eds.) 1992 Myths and Realities. London Business School, London.

    Google Scholar 

  • Giannone D., Lenza M. and Reichlin L. (2010). Business Cycles in The Euro Area; in Alesina, A. and Giavazzi, F. (eds.) Europe and the Euro, NBER c11669, The University of Chicago Press, Chicago, pp. 141–167.

    Google Scholar 

  • Glick, R and Rose, A.K. (2002). Does a Currency Union Affect Trade? The Time-Series Evidence. European Economic Review, 46, pp. 1125–1151.

    Article  Google Scholar 

  • Grauwe, P.D. (1994). Towards European Monetary Union Without the EMS. Economic Policy, 9(18), pp. 147–185.

    Article  Google Scholar 

  • Haberler, G. (1970). The International Monetary System: Some Recent Developments and Discussions; in Halm, G.N. (ed.) Approaches to Greater Flexibility of Exchange Rates. Princeton University Press, Princeton.

    Google Scholar 

  • Hardin, R. (1982). Collective Action. John Hopkins Press, Baltimore.

    Google Scholar 

  • Harding, D. and Pagan A.R. (2002). Dissecting the Cycle: A Methodological Investigation, Journal of Monetary Economics, 49(2), pp. 365–381.

    Article  Google Scholar 

  • Hine, R.C. (1985). The Political Economy of European Trade. Wheatsheaf Books, Brighton.

    Google Scholar 

  • Ingram, J. (1962). Regional Payments Mechanisms: The Case of Puerto Rico. University of North Carolina Press, North Carolina.

    Google Scholar 

  • Ingram, J. (1969). Comment: The Currency Area Problem; in Mundell, R.A. and Swoboda, A.K. (eds.) Monetary Problems of the International Economy. University of Chicago Press, Chicago.

    Google Scholar 

  • Kaldor, N. (1966). Causes of the Slow Rate of Economic Growth of the United Kingdom. Cambridge University Press, Cambridge.

    Google Scholar 

  • Kaldor, N. (1967). Strategic Factors in Economic Development. Cornell University Press, Ithaca.

    Google Scholar 

  • Kaldor, N. (1970). The Case for Regional Policies. Scottish Journal of Political Economy, 17(3), pp. 337–348.

    Article  Google Scholar 

  • Kaldor, N. (1972). The Irrelevance of Equilibrium Economics. Economic Journal, 82, 1237–1255.

    Article  Google Scholar 

  • Kaldor, N. (1975). Economic Growth and the Verdoorn Law: Comment on Mr. Rowthorn’s Article. Economic Journal, 85, pp. 891–896.

    Google Scholar 

  • Kaldor, N. (1978). Further Essays on Economic Theory. Duckworth, London.

    Google Scholar 

  • Kaldor, N. (1981a). Discussion; in Currie, D., Nobay, R. and Peel, D. (eds.) Macroeconomic Analysis. Croom Helm, London.

    Google Scholar 

  • Kaldor, N. (1981b). The Role of Increasing Returns, Technical Progress and Cumulative Causation in the Theory of International Trade and Economic Growth. Economie Appliquee, 34(3), pp. 593–617.

    Google Scholar 

  • Kaldor, N. (1985). Economics Without Equilibrium. University College Cardiff Press, Cardiff.

    Google Scholar 

  • Kamien, M.I. and Schwartz, N.L. (1982). Market Structure and Innovations. Cambridge University Press, Cambridge.

    Google Scholar 

  • Kay, J.A. (1989). Myths and Realities; in Davis, E., Kay, J. and Smales, C. 1992 Myths and Realities. London Business School, London.

    Google Scholar 

  • Kenen, P.B. (1969). The Theory of Optimum Currency Areas: An Eclectic View; in Mundell, R.A. and Swoboda, A.K. (eds.) Monetary Problems of the International Economy. University of Chicago Press, Chicago.

    Google Scholar 

  • Koopman S.J. and Azevedo J.V. (2003). Measuring Synchronization and Convergence of Business Cycles, Tinbergen Institute Discussion Paper, No. 2003-052/4.

    Google Scholar 

  • Kose M.A, Otrok C. and Whitman C.H. (2003). International Business Cycles: World, Region, and Country-Specific Factors. American Economic Review, 93, pp. 1216–1239.

    Article  Google Scholar 

  • Krugman P. (1993). What Do We Need to Know About the International Monetary System?; in Kenen, P. (ed.) Understanding Interdependence. Princeton University Press, Princeton, pp. 509–530.

    Google Scholar 

  • Lee J. (2012). Business Cycle Synchronisation in Europe: Evidence from a Dynamic Factor Model. International Economic Journal, 27(3), pp. 347–364.

    Article  Google Scholar 

  • Lehwald S. (2012). Has the Euro Changed Business Cycle Synchronisation? Evidence from the Core and the Periphery, IFO Working Paper, No.122.

    Article  Google Scholar 

  • Lipsey, R. (1960). The Theory of Customs Unions: A General Survey, Economic Journal, 70, pp. 496–513.

    Article  Google Scholar 

  • Lipsey, R. (1968). The Theory of Customs Unions: A General Survey; in Caves, R.E. and Johnson, H.G. (eds.) Readings in International Economics. Richard D. Irwin, Homewood.

    Google Scholar 

  • Lipsey, R. (1970). The Theory of Customs Unions: A General Equilibrium Analysis. Weidenfeld & Nicolson, London.

    Google Scholar 

  • Lundgren, N. (1969). Customs Unions of Industrial West European Countries; in Denton, G.R. (ed.) Economic Integration in Europe. Weidenfeld and Nicholson, London.

    Google Scholar 

  • MacDougall, D. (1992). Economic and Monetary Union and the European Community Budget. National Institute Economic Review, May, 64–68.

    Article  Google Scholar 

  • MacDougall, D. (2003). Economic and Monetary Union and the European Community Budget; in Baimbridge, M. and Whyman, P. (eds.) Economic and Monetary Union in Europe: Theory, Evidence and Practice. Edward Elgar, Cheltenham.

    Google Scholar 

  • Magnifico, G. (1973). European Monetary Unification. Wiley, New York.

    Book  Google Scholar 

  • Masson, P.R. and Taylor, M.P. (1993). Common Currency Areas and Currency Unions: An Analysis of the Issues, Parts I and II. Journal of International and Comparative Economics, 1(3–4), pp. 231–294.

    Google Scholar 

  • McDonald, F. (1992). The Single European Market; in McDonald, F. and Dearden, S. (eds.) European Economic Integration. Longman, London.

    Google Scholar 

  • McKinnon, R. (1963). Optimum Currency Areas. American Economic Review, 53, pp. 717–725.

    Google Scholar 

  • Meade, J. (1955). The Theory of Customs Unions, North-Holland Pub. Co., Amsterdam.

    Google Scholar 

  • Melitz, J. (2001). Geography, Trade and Currency Union, CEPR Discussion Paper No. 2987.

    Google Scholar 

  • Mundell, R.A. (1961). A Theory of Optimum Currency Areas. American Economic Review, 51, pp. 657–665.

    Google Scholar 

  • Myrdal, G. (1957). Economic Theory and Underdeveloped Regions. Duckworth, London.

    Google Scholar 

  • Neuberger, H. (1989). The Economics of 1992. Socialist Group European Parliament, Luxembourg.

    Google Scholar 

  • OECD. (1986). Flexibility in the Labour Market. OECD, Paris.

    Google Scholar 

  • Pasinetti, L. (1981). Structural Change and Economic Growth – A Theoretical Essay on the Dynamics of the Wealth of the Nations. Cambridge University Press, Cambridge.

    Google Scholar 

  • Persson, T. (2001). Currency Unions and Trade: How Large Is the Treatment Effect? Economic Policy, 33, pp. 435–448.

    Google Scholar 

  • Porter, M.E. (1990). The Competitive Advantage of Nations, Macmillan, London.

    Book  Google Scholar 

  • Prais, S.J. (1981). The Evolution of Giant Firms in Britain, Cambridge University Press, Cambridge.

    Google Scholar 

  • Romer, P.M. (1994). The Origins of Endogenous Growth. Journal of Economic Perspectives, 8(1), pp. 3–22.

    Article  Google Scholar 

  • Rose, A.K. (2000). One Money, One Market: Estimating the Effect of Common Currencies on Trade. Economic Policy, 20, pp. 7–45.

    Google Scholar 

  • Sayers, R.S. (1965). The Vicissitudes of an Export Economy: Britain Since 1880. Taylor & Francis, London.

    Google Scholar 

  • Scitovsky, T. (1956). Economies of Scale, Competition and European Integration. American Economic Review, 46, pp. 71–91.

    Google Scholar 

  • Scitovsky, T. (1958). Economic Theory and Western European Integration. George Allen and Unwin, London.

    Google Scholar 

  • Singh, A. (1977). UK Industry and the World Economy: A Case of De-industrialisation? Cambridge Journal of Economics, 1(2), pp. 113–136.

    Google Scholar 

  • Smith, A. (1992). Measuring the Effects of ‘1992’; in Dyker, D (ed.) The European Economy. Longman, London.

    Google Scholar 

  • Smith, A. and Venables, A.J. (1988). Completing the Internal Market in the European Community: Some Industry Simulations. European Economic Review, 32(4), pp. 1501–1525.

    Article  Google Scholar 

  • Swann, D. (1990). The Economics of the Common Market. Penguin, London.

    Google Scholar 

  • Thirlwall, A.P. (1980). Regional Problems Are “Balance-of-Payments” Problems. Regional Studies, 14(5), pp. 419–425.

    Article  Google Scholar 

  • Tower, E and Willett, T.D. (1970). The Concept of Optimum Currency Areas and the Choice Between Fixed and Flexible Exchange Rates; in Halm G.N. (ed.) Approaches to Greater Flexibility of Exchange Rates. Princeton University Press, Princeton.

    Google Scholar 

  • Vaubel, R. (1976). Real Exchange Rate Changes in the European Community: The Empirical Evidence and Its Implications for European Currency Unification. Weltwirtschaftliches Archiv, 112, pp. 429–470.

    Article  Google Scholar 

  • Vaubel, R. (1978). Strategies for Currency Unification. J.B.C. Mohr, Tubingen.

    Google Scholar 

  • Viner, J. (1950). The Customs Union Issue. Carnegie Endowment of International Peace, New York.

    Google Scholar 

  • von Hagen, J. (1993). Monetary Union and Fiscal Union: A Perspective from Fiscal Federalism; in Masson, P.R. and Taylor, M.P. (eds.) Policy Issues in the Operation of Currency Unions. Cambridge University Press, Cambridge.

    Google Scholar 

  • Whyman, P. (1997). Fiscal Federalism and EMU: A Proposal for a European Federal Transfer Scheme, Working Paper No. 97.10.5, Department of Social and Economic Studies, University of Bradford.

    Google Scholar 

  • Wise, M. and Gibb, R. (1993). Single Market to Social Europe. Longman, London.

    Google Scholar 

  • Young, A.A. (1928). Increasing Returns and Economic Progress. The Economic Journal, 38, pp. 527–42.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. School of Management University of Bradford, Bradford, UK

    Mark Baimbridge (Senior Lecturer in Economics)

  2. Plymouth Business School University of Plymouth, Plymouth, UK

    Ioannis Litsios (Lecturer in Economics)

  3. Westminster Business School University of Westminster, London, UK

    Karen Jackson (Senior Lecturer in Economics)

  4. Department of Economics and Related Studies, University of York, York, UK

    Uih Ran Lee (Lecturer in Economics)

Authors
  1. Mark Baimbridge
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Ioannis Litsios
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Karen Jackson
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Uih Ran Lee
    View author publications

    You can also search for this author in PubMed Google Scholar

Copyright information

© 2017 The Editor(s) (if applicable) and The Author(s) 2017, corrected publication March 2018.

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Baimbridge, M., Litsios, I., Jackson, K., Lee, U.R. (2017). Theoretical Foundations of European Economic Integration. In: The Segmentation of Europe. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-59013-8_2

Download citation

  • DOI: https://doi.org/10.1057/978-1-137-59013-8_2

  • Published:

  • Publisher Name: Palgrave Macmillan, London

  • Print ISBN: 978-1-137-59012-1

  • Online ISBN: 978-1-137-59013-8

  • eBook Packages: Economics and FinanceEconomics and Finance (R0)

Publish with us

Policies and ethics

Search

Navigation