Before the paper is able to achieve the objective of understanding how the current political process and political framework of member countries of the European Union are subordinating the various economic objectives and development of the region, the research paper must first and foremost of course be able to identify the various important abstract and applied concepts that would be use as theoretical frameworks for understanding and approaching the same problem. Therefore, to this end, the organization of the paper is as follows first, it would highlight what the European Union is introduce the economic political frameworks that would be used in the analysis. After that, an understanding of the European Union as an economic international trading agreement would be discussed and then integrated into the original discussion of the analytical framework that has previously been offered. After doing this, the paper should be able to focus on understanding how the current political process may or may not integrate into the overall decisions and economic factors that are involved in the economic development of the region.
Throughout such a process, the paper shall be highlighting various essential literature that previous economic research on the topic has dealt at in order for it to have a more sturdy academic and theoretical background. Also, throughout the discussions, the paper would be making use of minor examples and topics of interest that would further highlight and place forward the arguments that have been provided. Towards the end of the paper, a conclusion, recommendation, and avenues for further research would be offered so that other studies in the future may be able to build upon the concepts that have been offered in this research in understanding the economic development process not only from an academic economic point of view but also from a political, social, and behavioral point of view of the operations of the European Union.
The main methodology that would be use author of the paper are actually two very important concepts. First is a rather old economic concept that has been applied by economists ever since macro economics and microeconomics has delved into the subject of international trade international economics ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID4662 (McMillan, 1992).
In fact, the basic foundation of international trade, as early as in the 1960s as globalization was beginning to have extreme large impact on the economic development structures various regions all around the world -- and in this case Europe -- has been reviewed by economists and sturdy models had been built around the neoclassical economic assumptions of comparative and absolute advantage and why there is an eventual need for the formulation of economic trading agreements were what we now call as economic unions in the complicated jargon of trade economics ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID1988 (Schneider, 2005). The second methodological aspect, on the other hand, is a rather recent development in neoclassical economics that was originally applied to understanding agricultural biotechnology and its regulatory framework that could also be used in international economics and trade where there is politics and various interest groups involved in the decision-making process ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID10792 (North, 1990)-- a goal and objective that has already been sent out earlier on in the objective and understanding the main problem that has been offered in this research ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID2958 (North, 1995).
Going back, as has been indicated earlier, economists have long recognized that there is indeed the existence of international trade as early as before the Middle Ages when cargo ships were able to transport goods from one location to the other. Usually done by sea, international trade has now expanded to such a mind-boggling level that trade does not even anymore and confess only goods transported from one near location to the other but even services such as business process outsourcing, financial inflow and outflow, and even long-distance trading of such goods from one end of the world to another ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID3815 (Ethier, 1984). Therefore, economists eventually recognize the need that there should be a theory in order to explain why trade exists. Weve got doing too much into detail, basically, neoclassical economics points out that the reason why trade exists is that because there are countries that have comparative advantage of producing one good as compared to other countries and economies.
However, eventually, there is a problem that is faced with such an occurrence. Because of the extremely high productive capacity of one nation versus the productive capacity of another, there eventually came a time when only a handful of countries were able to enjoy the benefits of international trade and globalization because they had a large comparative advantage of reducing one good as compared to the comparative advantage of other countries and economies ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID9795 (Rodrik, 1995). Therefore, trade protectionism became an important aspect of international economics because it allowed for the protection of industries. The main methods of trade protectionism are quantity controls of imports, tariffs, and other means of controlling taxation.
This is where the formulation of the European Union comes in. Because of such protectionism, economic regions had realized that there were more problems that protectionism creates and that it solved ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID3003 (Deardorff, 1984). For example, countries and economies that are located near to each other experience that if tariffs, protections, and quantity controls were minimized, and a more free market approach was made use of in economic transactions, then regions may be able to develop better. Therefore, some regions made use of international agreements among themselves to remove boundaries of trade in order to bring about economic development. There are many levels of such agreements such as economic trading agreements, contracts, operation drafts, and economic unions -- and the European Union is one such economic union. There is many literature on the subject both in the theoretical and applied side of the logic of forming a trade union, but basically, for the purpose of our discussion, it is an economic move in order to further the growth of specific economic regions by lowering barriers to trade such as labor mobility, its mobility, and so forth where a free market -- and not government regulations -- controlled the inflow and outflow of goods and support such future development outlooks ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID16170 (Krugman, 1986).
The next framework for analysis is also offered by an economist in 1999 who indicated that even in trade unions and freely operating capital markets, we could not necessarily safe at the operations of the market are only dedicated to the supply and demand curves. In fact, the decision frameworks of regulators and government stakeholders take into consideration political parties, bureaucracies, the media, the decisions of the electoral body, and even cultural institutions such as religion, social norms, and so forth. Although traditional economists do not like the idea of integrating all of these factors into their economic models, researchers have since come to realize that this is indeed the case, that the decisions of the free market are also affected by the social, cultural, and other norms of the institution surrounding these locations ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID8781 (Goldstein Khan, 1985). In fact, in theory, it is captured by a Venn diagram of intersecting political institutions and cultural norms which eventually decide the transactions within an economic system.
Going to the perspective of the European Union, it is assumed that the reason why be economic union was formulated in order to ease the transactions of goods and services. From the goods perspective, by removing trade barriers, economies are able to focus in their operations without necessarily increasing the prices of their goods to the markets where they would export them. In an economic model, this would be captured by a supply and demand curve intersection where in the demand curve remains the same for goods that are exported into other economic regions -- the reason for this is that consumers are not necessarily affected by the inflow of goods into the region notwithstanding the comparative advantage of work those goods were produced -- but the supply curve is incrementally increased because of the value added so-called taxation in the form of a tariff which trade barriers create. In such an economic union such as the European Union, trade barriers are abolished and the demand and supply curve of each necessary member country of the economic union would act as if they are part of the local markets. Another interesting effect of the European Union from the perspective of economic theory is its effect on labor migration. Productive capacity in an economy is dictated by the mix of labor and capital.
However, traditionally, again because of barriers to entry, labor could not freely move from one economic location to the other and therefore the value of the marginal product of labor is not maximize among comparative advantage economies. In the European Union, because of policies at least in theory, such productive capacities may be maximized by individual locations because labor is free to move and there are no transaction and transportation costs involved in migrating from one location and economic region to the other, therefore against supporting the original theory of comparative advantage ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID14651 (Wong Grinols, 1995).
What is interesting from our perspective, however, is that observing the modern European union is an economists nightmare because although a trade union should be able to carry out all the various details that have been indicated above of the preconditions of international trade within an economic union, political decisions and political representatives of member countries seem to have an interaction effect on the market. If the traditional economic rationale was followed, then the interactions of the market of the European Union should be without political transaction ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID10031 (Krugman, 1994).
One should not mix this with the fact that a government should not exist -- in fact it should in order to provide various public goods such as infrastructure, transportation, and the ability to integrate institutions and frameworks in order for the economic cooperation and union to develop and carry out its responsibilities. However, a current observation that is seen -- both from news articles and even in the academic economics the future that has been developed into something -- is that trade factors and economic productivity is not the most significant determinant of policies regarding trade within the European Union but rather it be various institutional and political decisions of representatives within the various governments. For example, for two countries within the European Union that have comparative advantage which could be beneficial for the two if they traded freely, because of the personal and private relationships of the cultures and political representatives between the two countries, such representatives choose to trade with other members of the European Union rather than those which would maximize the said trading agreement ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID9734 (Jones Keating, 1995). Basing our framework from the theories and indications above, one would immediately arrive towards the fact that the European Union, although it seems to be formulated at least in paper from the original economic requirements of comparative advantage to minimize costs and increase productivity is actually acting like individual nations and not as a cooperative union.
Of course, there are specific markets and industries that followed the economic model. However, for more controversial goods and services, the political institutions and political stakeholders seem to have a very strong impact and effect on the economic behavior of the European Union rather than making the market take control of the forward economic development. As a result, its not only undermines the original purpose of the European Union is even a barrier to the further economic development and improvement of the region which was the original reason why the European Union as a economic union was created in the 1st Pl ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID8034 (Vahl, 1997).
Furthermore, it has been even observed by some researchers that political relationships and institutions are not only the determinants of the policies and economic agreements formulated in the European Union but even the political process of the election. Going back to the framework that has been indicated above about institutions and cultural norms, although the European Union is geographically close to one another, psychologists and historians would easily conclude and tell you that some countries within the European Union members are necessarily not in a good relationship with others ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID2789 (Hix, 1999).
As a result, some political actions although hurtful to the economy would eventually be passed because these individuals in a representative democracy are elected into office if they are able to fulfill the original requirements and norms of society and discrimination against other countries which the union is also part of. And because the political process of the election and representation is indeed a complicated interplay of institutions, bureaucracies, the media, and even the electoral body, what is observed by researchers is that the original economic conditions and economic rationale for formulating the union in the 1st Pl. is pushed further back into the spectrum of what such a union may achieve. To date, even, economists have pointed out that the only thing missing from the European Union are tariffs -- and taxes of international trade are easy enough to find a loophole from if given the right incentives and the right policies in order to remove such responsibilities.
The paper has indicated that only the reason for formulating an economic union such as the European Union does but also indicates that there are many factors involved in the decision-making process of economic operation. The European Union, it seems, was formulated only by name and there are many political frameworks and political decisions that undermine the original economic goal of development for this region. Further explorations into the subject may discover and make use of statistical tools in order to make sure the relative weights of just how much such institutions and politics affect either positively or for sure negatively the economic associations and impacts to the region.
Throughout such a process, the paper shall be highlighting various essential literature that previous economic research on the topic has dealt at in order for it to have a more sturdy academic and theoretical background. Also, throughout the discussions, the paper would be making use of minor examples and topics of interest that would further highlight and place forward the arguments that have been provided. Towards the end of the paper, a conclusion, recommendation, and avenues for further research would be offered so that other studies in the future may be able to build upon the concepts that have been offered in this research in understanding the economic development process not only from an academic economic point of view but also from a political, social, and behavioral point of view of the operations of the European Union.
The main methodology that would be use author of the paper are actually two very important concepts. First is a rather old economic concept that has been applied by economists ever since macro economics and microeconomics has delved into the subject of international trade international economics ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID4662 (McMillan, 1992).
In fact, the basic foundation of international trade, as early as in the 1960s as globalization was beginning to have extreme large impact on the economic development structures various regions all around the world -- and in this case Europe -- has been reviewed by economists and sturdy models had been built around the neoclassical economic assumptions of comparative and absolute advantage and why there is an eventual need for the formulation of economic trading agreements were what we now call as economic unions in the complicated jargon of trade economics ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID1988 (Schneider, 2005). The second methodological aspect, on the other hand, is a rather recent development in neoclassical economics that was originally applied to understanding agricultural biotechnology and its regulatory framework that could also be used in international economics and trade where there is politics and various interest groups involved in the decision-making process ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID10792 (North, 1990)-- a goal and objective that has already been sent out earlier on in the objective and understanding the main problem that has been offered in this research ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID2958 (North, 1995).
Going back, as has been indicated earlier, economists have long recognized that there is indeed the existence of international trade as early as before the Middle Ages when cargo ships were able to transport goods from one location to the other. Usually done by sea, international trade has now expanded to such a mind-boggling level that trade does not even anymore and confess only goods transported from one near location to the other but even services such as business process outsourcing, financial inflow and outflow, and even long-distance trading of such goods from one end of the world to another ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID3815 (Ethier, 1984). Therefore, economists eventually recognize the need that there should be a theory in order to explain why trade exists. Weve got doing too much into detail, basically, neoclassical economics points out that the reason why trade exists is that because there are countries that have comparative advantage of producing one good as compared to other countries and economies.
However, eventually, there is a problem that is faced with such an occurrence. Because of the extremely high productive capacity of one nation versus the productive capacity of another, there eventually came a time when only a handful of countries were able to enjoy the benefits of international trade and globalization because they had a large comparative advantage of reducing one good as compared to the comparative advantage of other countries and economies ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID9795 (Rodrik, 1995). Therefore, trade protectionism became an important aspect of international economics because it allowed for the protection of industries. The main methods of trade protectionism are quantity controls of imports, tariffs, and other means of controlling taxation.
This is where the formulation of the European Union comes in. Because of such protectionism, economic regions had realized that there were more problems that protectionism creates and that it solved ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID3003 (Deardorff, 1984). For example, countries and economies that are located near to each other experience that if tariffs, protections, and quantity controls were minimized, and a more free market approach was made use of in economic transactions, then regions may be able to develop better. Therefore, some regions made use of international agreements among themselves to remove boundaries of trade in order to bring about economic development. There are many levels of such agreements such as economic trading agreements, contracts, operation drafts, and economic unions -- and the European Union is one such economic union. There is many literature on the subject both in the theoretical and applied side of the logic of forming a trade union, but basically, for the purpose of our discussion, it is an economic move in order to further the growth of specific economic regions by lowering barriers to trade such as labor mobility, its mobility, and so forth where a free market -- and not government regulations -- controlled the inflow and outflow of goods and support such future development outlooks ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID16170 (Krugman, 1986).
The next framework for analysis is also offered by an economist in 1999 who indicated that even in trade unions and freely operating capital markets, we could not necessarily safe at the operations of the market are only dedicated to the supply and demand curves. In fact, the decision frameworks of regulators and government stakeholders take into consideration political parties, bureaucracies, the media, the decisions of the electoral body, and even cultural institutions such as religion, social norms, and so forth. Although traditional economists do not like the idea of integrating all of these factors into their economic models, researchers have since come to realize that this is indeed the case, that the decisions of the free market are also affected by the social, cultural, and other norms of the institution surrounding these locations ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID8781 (Goldstein Khan, 1985). In fact, in theory, it is captured by a Venn diagram of intersecting political institutions and cultural norms which eventually decide the transactions within an economic system.
Going to the perspective of the European Union, it is assumed that the reason why be economic union was formulated in order to ease the transactions of goods and services. From the goods perspective, by removing trade barriers, economies are able to focus in their operations without necessarily increasing the prices of their goods to the markets where they would export them. In an economic model, this would be captured by a supply and demand curve intersection where in the demand curve remains the same for goods that are exported into other economic regions -- the reason for this is that consumers are not necessarily affected by the inflow of goods into the region notwithstanding the comparative advantage of work those goods were produced -- but the supply curve is incrementally increased because of the value added so-called taxation in the form of a tariff which trade barriers create. In such an economic union such as the European Union, trade barriers are abolished and the demand and supply curve of each necessary member country of the economic union would act as if they are part of the local markets. Another interesting effect of the European Union from the perspective of economic theory is its effect on labor migration. Productive capacity in an economy is dictated by the mix of labor and capital.
However, traditionally, again because of barriers to entry, labor could not freely move from one economic location to the other and therefore the value of the marginal product of labor is not maximize among comparative advantage economies. In the European Union, because of policies at least in theory, such productive capacities may be maximized by individual locations because labor is free to move and there are no transaction and transportation costs involved in migrating from one location and economic region to the other, therefore against supporting the original theory of comparative advantage ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID14651 (Wong Grinols, 1995).
What is interesting from our perspective, however, is that observing the modern European union is an economists nightmare because although a trade union should be able to carry out all the various details that have been indicated above of the preconditions of international trade within an economic union, political decisions and political representatives of member countries seem to have an interaction effect on the market. If the traditional economic rationale was followed, then the interactions of the market of the European Union should be without political transaction ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID10031 (Krugman, 1994).
One should not mix this with the fact that a government should not exist -- in fact it should in order to provide various public goods such as infrastructure, transportation, and the ability to integrate institutions and frameworks in order for the economic cooperation and union to develop and carry out its responsibilities. However, a current observation that is seen -- both from news articles and even in the academic economics the future that has been developed into something -- is that trade factors and economic productivity is not the most significant determinant of policies regarding trade within the European Union but rather it be various institutional and political decisions of representatives within the various governments. For example, for two countries within the European Union that have comparative advantage which could be beneficial for the two if they traded freely, because of the personal and private relationships of the cultures and political representatives between the two countries, such representatives choose to trade with other members of the European Union rather than those which would maximize the said trading agreement ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID9734 (Jones Keating, 1995). Basing our framework from the theories and indications above, one would immediately arrive towards the fact that the European Union, although it seems to be formulated at least in paper from the original economic requirements of comparative advantage to minimize costs and increase productivity is actually acting like individual nations and not as a cooperative union.
Of course, there are specific markets and industries that followed the economic model. However, for more controversial goods and services, the political institutions and political stakeholders seem to have a very strong impact and effect on the economic behavior of the European Union rather than making the market take control of the forward economic development. As a result, its not only undermines the original purpose of the European Union is even a barrier to the further economic development and improvement of the region which was the original reason why the European Union as a economic union was created in the 1st Pl ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID8034 (Vahl, 1997).
Furthermore, it has been even observed by some researchers that political relationships and institutions are not only the determinants of the policies and economic agreements formulated in the European Union but even the political process of the election. Going back to the framework that has been indicated above about institutions and cultural norms, although the European Union is geographically close to one another, psychologists and historians would easily conclude and tell you that some countries within the European Union members are necessarily not in a good relationship with others ADDIN ZOTERO_ITEM sorttrue,citationItemsitemID2789 (Hix, 1999).
As a result, some political actions although hurtful to the economy would eventually be passed because these individuals in a representative democracy are elected into office if they are able to fulfill the original requirements and norms of society and discrimination against other countries which the union is also part of. And because the political process of the election and representation is indeed a complicated interplay of institutions, bureaucracies, the media, and even the electoral body, what is observed by researchers is that the original economic conditions and economic rationale for formulating the union in the 1st Pl. is pushed further back into the spectrum of what such a union may achieve. To date, even, economists have pointed out that the only thing missing from the European Union are tariffs -- and taxes of international trade are easy enough to find a loophole from if given the right incentives and the right policies in order to remove such responsibilities.
The paper has indicated that only the reason for formulating an economic union such as the European Union does but also indicates that there are many factors involved in the decision-making process of economic operation. The European Union, it seems, was formulated only by name and there are many political frameworks and political decisions that undermine the original economic goal of development for this region. Further explorations into the subject may discover and make use of statistical tools in order to make sure the relative weights of just how much such institutions and politics affect either positively or for sure negatively the economic associations and impacts to the region.
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