Globalization and economy

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“I Mediterranei”- Erasmus Network Malta Summer School 2006 - Antonio José Jáuregui 1- SMEs in the economic globalization: the role of microcredit to develop partnership and international trade of SME Internal Market 2- The Lisbon strategy 3- The Single Market 4-The Benefits of the Single Market 5- The Euro and Democracy: future Challenges

SMEs in the economic globalization: the role of micro-credit to develop partnership and international trade of SME Internal Market

Globalization and economy
When we take a walk in the part, when we go to our work or when we just watch TV or read newspaper we are overloaded of advertisements, with information about some new products. When we open the newspaper some of us are opening the economic part to see what are the trends of the stock exchange. This are some of the factors that present our life. We are leaving and working in a world which is globalized and at the same time is driven by country or union economy. But in order to understand all these statements we need to know what globalized world, why is the economy so important and who influence them. First I will start with most common and in some times most complicated word Globalization. According to the article 1 globalization is the process of close relationship between different societies and even humans across the globe. This means that we can communicate and work with someone who is on the other half of the world, or we can buy products form other countries, or even continents, and they to be delivered to our door. The globalization in a more simple way can be explained according to me with a process in which communication and movement
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of goods and money across the world have been based on a channels system. Example of the globalization is Western Union. This institution offers transactions all over the world, so you can send and receive money in different places or economies. Another example for the globalization is the big companies which are opening their own branches across the world. With this action they are allowing people from countries different form mother-company origin to order and consume products produced somewhere else. This theses is supported by definition of globalization: Multinational corporations manufacture products in many countries and sell to consumers around the world. Money, technology and raw materials move ever more swiftly across national borders. Along with products and finances, ideas and cultures circulate more freely. We saw what the globalization means in genera and now we will look in a more detailed way. We now will define what is the economic globalization. This is the “widening, deepening and speeding up of worldwide interconnectedness in all aspects of contemporary social life, from … financial to the spiritual” 2 . In other words finance globalization is when companies and enterprises use different ways of delivering and providing services in the world to their customers. The globalization is the process in which companies are finding different ways of satisfying consumers’ requirements. But what happens with the economy? Is this good or bad? According to me globalization is good for the world and local (country) economy because big companies, often known as blue chips companies, are opening their own offices or branches in different parts of the world so as to be competitive in the market. This support the national economy because it brings investments in the company, it is creating new job and mainly support the cash flow. As we can
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Defining Globalization

Economic Globalization

see form the presented diagram there is a exchange between companies and households of labour and goods. But when we speak for economy we cannot mention and the role of the government because the government is the institution thanks to which we have the term economy. The role of the government is to maintain the balance between them, stimulate when necessary, and provide security for the foreigner company which are going to invest.

Introduction to Small and Medium Size Enterprises
Until now we present what means globalization, in some extent what is the role of the globalization in the economy. When we was speaking for economy we can know that we mean the relation between companies, customers and government. When we speak in terms of economic we understand that BUSINESS is not created only by one enterprise. The business contains a mix of different sizes of companies and enterprises. There are different sizes: small, medium and big. The small and medium are grouped under the abbreviation SME. The big companies sometimes are referred as multinational, big, or blue chips. You can ask what is the difference between them? Is it only the name and the type of the company or there is something else? My answer will be that there is something else. Most of the people now think that companies are measured only by the number of employees. This is not true. Companies are divided according their turnover and number of employees. Before we go in a details of SME we need to understand what are the difference between them and the blue chips. In the economy world there is a phrase “Small is beautiful, big is powerful”. As we know in economy is measured with the factors of GDP ( gross domestic product ) and GNP ( gross national product ). This factors aren’t stable all the time during period of time ( more than a year ). Because they

are not stable there is some fluctuation of the factors and some times they go up and sometimes they go done. In the light of GDP when coefficient of this factor rises this means that the economy is good which leads to growth in the small companies, because there is a higher demand for goods and the big companies can not satisfy immediately this demand. When we have a recession of the economy this automatically leads to closing some of the small companies which can not survive this recession. But why we are stating that the small is beautiful and big is powerful. When we have a recession big companies are more likely to survive because they can suffer some economic losses which will not dive them to a bankruptcy. When we have a small company some of them can survive, but most of them will leave the market because they can not suffer so big economic losses. On the other hand, when the market change small companies are created or the present one are adapting to the market, so as to respond to the customers demand. The big companies are responding slowly compared to the small one, because they have to change some of their policy. The small companies are more adaptive to the changing economic situation. Following the idea which we presented till now, we will arrive at the conclusion that SME are more adaptive to the market compare to the big companies. Since in the EU was introduced the Euro the EU commission created a table by which big companies can be differed from the others: Because Euro became a single currency in EU this was necessary to be done so as to be easier to distinguish different sizes of companies by their annual turnover.

The Strategy

Lisbon

Met in march 2000 in Lisbon, the head of states of government of the European Union have launched the objective to ‘become the most competitive and dynamic knowledge society in the world’ by 2010. The measures that have been selected and acted upon since then are known as ‘The Lisbon Strategy’.

The new challenge
The European Union is confronted with a quantum shift resulting from globalisation and the challenges of a new knowledge-driven economy. These changes are affecting every aspect of people’s lives and require a radical transformation of the European economy. The Union must shape these changes in a manner consistent with its values and concepts of society and also with a view to the forthcoming enlargement. The rapid and accelerating pace of change means it is urgent for the Union to act now to harness the full benefits of the opportunities presented. Hence the need for the Union to set a clear strategic goal and agree a challenging programme for building knowledge infrastructures, enhancing innovation and economic reform, and modernising social welfare and education systems.

As a result of stability-oriented monetary policy supported by sound fiscal policies in a context of wage moderation, inflation and interest rates are low, public sector deficits have been reduced remarkably and the EU's balance of payments is healthy. The euro has been successfully introduced and is delivering the expected benefits for the European economy. The internal market is largely complete and is yielding tangible benefits for consumers and businesses alike. The forthcoming enlargement will create new opportunities for growth and employment. The Union possesses a generally well-educated workforce as well as social protection systems able to provide, beyond their intrinsic value, the stable framework required for managing the structural changes involved in moving towards a knowledge-based society. Growth and job creation have resumed. These strengths should not distract our attention from a number of weaknesses. More than 15 million Europeans are still out of work. The employment rate is too low and is characterised by insufficient participation in the labour market by women and older workers. Long-term structural unemployment and marked regional unemployment imbalances remain endemic in parts of the Union. The services sector is underdeveloped, particularly in the areas of telecommunications and the Internet. There is a widening skills gap, especially in information technology where increasing numbers of jobs remain unfilled. With the current improved economic situation, the time is right to undertake both economic and social reforms as part of a positive strategy which combines competitiveness and social cohesion.

The Union's strengths and weaknesses
The Union is experiencing its best macro-economic outlook for a generation.

The way forward

The Union has today set itself a new strategic goal for the next decade: to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion. Achieving this goal requires an overall strategy aimed at: • preparing the transition to a knowledge-based economy and society by better policies for the information society and R&D, as well as by stepping up the process of structural reform for competitiveness and innovation and by completing the internal market; • modernising the European social model, investing in people and combating social exclusion; • sustaining the healthy economic outlook and favourable growth prospects by applying an appropriate macro-economic policy mix. This strategy is designed to enable the Union to regain the conditions for full employment, and to strengthen regional cohesion in the European Union. The European Council needs to set a goal for full employment in Europe in an emerging new society which is more adapted to the personal choices of women and men. If the measures set out below are implemented against a sound macroeconomic background, an average economic growth rate of around 3% should be a realistic prospect for the coming years. Implementing this strategy will be achieved by improving the existing processes, introducing a new open method of coordination at all levels, coupled with a stronger guiding and coordinating role for the European Council to ensure more coherent strategic direction and effective monitoring of progress. A meeting of the European

Council to be held every Spring will define the relevant mandates and ensure that they are followed up.

Introduction
The European Union means many things to many people, but it is undeniable that the EU is more than just the sum of its parts. It was created to help member states solve problems that cannot be efficiently tackled by countries alone. The creation of the single currency were one of the milestones to European integration, that is key to EU’s future success.

The Euro
General information
Euro banknotes and coins have been in circulation since 1st January 2002 and are now a part of daily life for over 300 million people living in the euro area. It took only 10 years to get from the Treaty of Maastricht enshrining the principle of the single currency, to the point where euro notes and coins were circulating in 12 countries. The euro has replaced currencies that were centuriesold symbols and now represents an instrument to create a common European identity.

The creation of the euro
The idea of a single currency was first born in 1970 and was mentioned in the Werner report when the six members of the EEC proposed a convergence between their economies and currencies. In June 1989 at the Madrid European Council, Commission President Jacques Delors put forward a plan and a timetable for bringing about an economic and monetary union, which became a first step in creating the single currency. Later other steps were taken that eventually led to the creation of the single currency: The Treaty signed at Maastricht in February 1992. The treaty laid down a set of criteria to be met by member states that were to qualify for EMU. These criteria all about economic and financial discipline: the most important are: budget deficit cannot exceed 3% of GDP for more than a short period of time, limiting public borrowing to a maximum of 60% of GDP and the currency’s Exchange rate and prices must remain stable. January 1994: the European Monetary Institute was set up. The European Monetary Institute (EMI) is set up and the new procedures are introduced for monitoring the EU countries’ economies and encouraging convergence between them June 1997: the Stability and Growth Pact. The Amsterdam European Council agrees that the “Growth and Stability Pact’ and the new exchange rate mechanism (a re-born EMS) designed to ensure stabile exchange rates between the Euro and the currencies of EU countries that remain outside the euro-area. A design is also agreed for the ‘European’ side of euro coins May 1998: 11 countries qualify for the Euro. Meeting in Brussels

from 1 to 3 May 1998, the Union’s political leaders decide that 11 EU countries met the requirements for membership for the euro-area. They announce the definitive exchange rates between the participating currencies. 1 January 1999: birth of the Euro. The 11 currencies of the participating countries disappear and are replaced by the euro, which does become the shared currency of Austria, Belgium, Finland, France, Germany, Luxembourg, Ireland, Italy, the Netherlands, Portugal and Spain. (Greece joins them on 1 January 2001). From this point onwards the European Central Bank takes over from the EMI and is responsible for monetary policy, which is defined and implemented in Euro. 1 January 2002: euro coins and notes are introduced. This is the start of the period during which national currency notes and coins are withdrawn from circulation. The period ends on 28 February 2002, thereafter only the euro is legal tender in the euro area countries The introduction of a single currency for many separate countries presents a number of advantages and disadvantages for the participating nations.

Effects of a single currency
There are a number of clear benefits to having a single European currency which were the major motivations behind the creation of the euro. Practical benefits for citizens: travelling with the euro.

Internal market: reaping the full benefits of the EU's single market. Single financial market: benefits for savers and borrowers. Macroeconomic framework: benefits of a single currency to the economy as a whole.

Practical benefits for citizens. With euro cash in their pockets, people can travel and shop throughout most of the Union without having to change Money. Another effect of the common European currency is that differences in prices—in particular in price levels— should decrease. This is supposed to result in increased competition or consolidation of companies, Price transparency across borders should help consumers find lower cost goods or services. In reality, the effects of the euro over the level of the prices in Europe is disputable. Despite the official statistics, many citizens have stated the strong increase of the prices in the years after the introduction of the euro, and this have been confirmed by field studies.

and businesses when exchanging from one national currency to another. One of the most important benefits of the euro is lowered exchange rate risks, which will make it easier to invest across borders. Before currency flutiations made it risky for companies or individuals to invest or even import/export outside their own currency zone. The Eurozone greatly increases the potentially "exchange-risk free" investment area. At the same time, this is likely to increase foreign investment in countries with more liberal markets and reduce that in those with rigid markets. Some people worry that thus will see profits flowing away from particular member states to the detriment of their traditional social values. It might also result in the reduction of local decision makers in businesses

Single financial market.
Another significant advantage of switching to the euro is the creation of deeper financial markets. Financial markets on the continent are expected to be far more liquid and flexible than they were in the past. There is more competition for, and availability of financial products across the union. This will reduce the financial servicing costs to businesses and the costs associated with public debt. It is expected that the broader, deeper markets will lead to increased stock market capitalisation and investment.

Macroeconomic framework.
Improved macroeconomic stability is an important benefit of the euro for the entire continent. Much of Europe has been susceptible to economic problems such as inflation throughout the last 50 years. Inflation is a very damaging phenomenon from most of society’s perspective. It discourages investment, can cause social unrest, and causes problems for those on fixed incomes and for taxation. Many countries have been

Single market.
There are the benefits of free movement of capital, people, resources, services. Another benefit is the removal of bank transaction charges that previously were a cost to both individuals

unable or unwilling to deal with serious inflationary pressures but the European Central Bank modeled on the Bundesbank is independent of the pressures of national governments and has a mandate to keep inflationary pressures low. But as a matter of fact, the effect of the euro on prices in Europe is widely disputed. Although the official statistics from Eurostat show a moderate increase in prices, many citizens perceive it not to be the case. They feel that prices have increased strongly and even exploded in the years after the euro, probably because entrepreneurs rounded up their prices by its introduction, developed new products or services that were not in the official panel, and generally benefited of the weaker control that consumers had over the prices.

The Benefits of the Single Market
50 years from the Treaty of Rome (1957) to the EU (2007) Economic and social progress There have been three key milestones since the EU has been founded: - Creation of Customs Union - The Single Market - Economic and Monetary Union The principle of free movement of goods is one of the cornerstones of the internal market. This principle implies that national barriers to the free movement of goods within the EU be removed.( see www.ec.europa.eu) Article 28, 29, and 30 of the EC Treaty which prohibit measures which have an effect equivalent to quantitative restrictions in intra Community trade.

Decision 3052/95/CE of the European Parliament and Council of Ministers dated the 13 December 1995 established a procedure of information exchange between Member States on national measures which derogate from the principle of free circulation of goods within the Community. There is ample case law of the Court of Justice concerning Articles 28 to 30 of the Treaty. This case law serves as a basis for a practical guide to the concepts and application of Articles 28 to 30 of the EC Treaty. Since the case "Cassis de Dijon" the principle of Mutual Recognition, has been used in the process of free movement of goods. The free movement of goods has generated nearly €900 billion in extra prosperity-about €6000 per household- in its first ten years. It has contributed to a 30% increase in trade in manufactured goods in the EU since 1992, thus increasing the selection of goods available and increasing competition and made the EU more internationally competitive, for example EU export to countries outside the EU increased from 6.9% of the EU GDP in 1992 to 11.2% in 2001. It has boosted purchasing power through pressure on prices, the gap between the EU’s highest and lowest prices has been narrowing; some goods are cheaper in absolute terms, the free movement of goods has generated nearly €900 billion in extra prosperity-about €6000 per household- in its first ten years. It has contributed to a 30% increase in trade in manufactured goods in the EU since 1992, thus increasing the selection of goods available and increasing competition. It has made the EU more internationally competitive. For example EU export to countries outside the EU increased from 6.9% of the EU GDP in 1992 to 11.2% in 2001. It has boosted purchasing power through pressure on prices. The gap between the

EU’s highest and lowest prices has been narrowing; some goods are cheaper in absolute terms. Definition: “this freedom enables citizens of one Member State to travel to others, alone or with their families, to work there (permanently or temporarily), to visit places as tourists or simply to live there. The idea behind EU legislation in this field is that citizens from other Member States should be treated equally with domestic ones – they should not be discriminated against.” (Wikipedia Encyclopaedia).

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“Inform citizens; ensure strict compliance with existing Community law; make Community law on the free movement of persons easier to understand and to restructure it around the concept of "citizenship of the Union"; consider substantive changes to existing law.” (conclusions suggested by EU officials: http://europa.eu/ ). Adjusting of the welfare systems for dealing with migrant citizens after the transitional periods are over.

BASIC LEGAL INSTRUMENTS: - Article 39 (ex 48) of the EC Treaty - Regulation (EEC) No 1612/68 - Community law by Directive 73/148/EEC - Council Directive 64/221/EEC of 25 February 1964 - Regulation 1408/71 of 14 June 1971 - Citizenship Directive 2004/38 COMPONENTS: - Issuing of Visas (students, workers, residences) - Family and dependents of workers - Coordination of Social security systems, Invalidity insurance - EURES, ( - University exchanges for students (e.g Erasmus) - Vocational training exchanges (e.g. Leonardo Da Vinci) - Protection of human rights ( European Monitoring Centre on Racism and Xenophobia- 1998, Charter of Fundamental Rights2000) - Patent system - European Year of Equal Opportunities, anti-discrimination policies - Eastern European Countries feeling disadvantaged because of ‘transitional periods’. - Fear of losing national identities

This articles are the result of our personal elaboration.

Next Number: Welcome Bulgaria Welcome Romania “THE EURO AND DEMOCRACY” New Bulgarian University Professori Jean Monnet di Studi Europei Commissione Europea Atelier: “I Mediterranei” South/East Dialogue – Thematic Networks SEDEIC Consortium Friday 20th & Saturday 21th October 2006 Venerdì 20 e Sabato 21 Ottobre 2006

Elsa María González Fernández Rampino Vittorio Pavlu Darina Menshikova Ekaterina
The Euro and Democracy: future Challenges

European Commission • Directorate General for Education and Culture The University of Malta : • European Union Unit • Faculty of Laws • Faculty of Arts The University of Roma La Sapienza : • Faculty of Chemistry EU Representation in Malta Ambasciata d’Italia in Malta Jean Monnet lectures of Summer School “José Antonio Jáuregui”.

Acknowledgement: The authors of the articles: “SMEs in the economic globalization: the role of micro-credit to develop partnership and international trade of SME Internal Market”

Matthew Caruana Galizia Milcho Rashevky Javier, Ollo Prat

The Lisbon strategy

Andrew Caruana Galizia Yixiang Zeng Patricia Abrudan Sanchez Martin Diana Andrea Proietti
The Single Market

Lida Sherafatmand Colombi Massimiliano Mariana Iancau Simina

The Benefits of the Single Market

Haiduc Marilena Radomir Apostolov