Globalization and economy by maclaren1

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Euro and Democracy




                  “I Mediterranei”- Erasmus Network
          Malta Summer School 2006 - Antonio José Jáuregui


1- SMEs in the economic             3- The Single Market
globalization: the role of micro-
credit to develop partnership       4-The Benefits of the Single
and international trade of SME      Market
Internal Market
                                    5- The Euro and Democracy:
2- The Lisbon strategy              future Challenges
                                             of goods and money across the world
                                             have been based on a channels system.
                SMEs in the                  Example of the globalization is Western
                economic                     Union. This institution offers transactions
                                             all over the world, so you can send and
                globalization:               receive money in different places or
                the role of                  economies. Another example for the
                micro-credit to              globalization is the big companies which
                develop                      are opening their own branches across
                                             the world. With this action they are
                partnership                  allowing people from countries different
and international trade of SME               form mother-company origin to order and
Internal Market                              consume products produced somewhere
                                             else. This theses is supported by
                                             definition of globalization:
                                             Multinational corporations manufacture
Globalization and economy                    products in many countries and sell to
                                             consumers around the world. Money,
                                             technology and raw materials move ever
        When we take a walk in the part,     more swiftly across national borders.
when we go to our work or when we just       Along with products and finances, ideas
watch TV or read newspaper we are            and cultures circulate more freely.
overloaded of advertisements, with           We saw what the globalization means in
information about some new products.         genera and now we will look in a more
When we open the newspaper some of           detailed way. We now will define what is
us are opening the economic part to see      the economic globalization. This is the
what are the trends of the stock             “widening, deepening and speeding up of
exchange. This are some of the factors       worldwide interconnectedness in all
that present our life. We are leaving and    aspects of contemporary social life, from
working in a world which is globalized and   … financial to the spiritual” 2 . In other
at the same time is driven by country or     words finance globalization is when
union economy. But in order to               companies and enterprises use different
understand all these statements we need      ways of delivering and providing services
to know what globalized world, why is the    in the world to their customers.
economy so important and who influence       The globalization is the process in which
them.                                        companies are finding different ways of
First I will start with most common and in   satisfying consumers’ requirements. But
some times most complicated word             what happens with the economy? Is this
Globalization. According to the article 1    good or bad? According to me
globalization is the process of close        globalization is good for the world and
relationship between different societies     local (country) economy because big
and even humans across the globe. This       companies, often known as blue chips
means that we can communicate and            companies, are opening their own offices
work with someone who is on the other        or branches in different parts of the world
half of the world, or we can buy products    so as to be competitive in the market.
form other countries, or even continents,    This support the national economy
and they to be delivered to our door. The    because it brings investments in the
globalization in a more simple way can be    company, it is creating new job and
explained according to me with a process     mainly support the cash flow. As we can
in which communication and movement

1                                            2
    Defining Globalization                       Economic Globalization
see form the presented diagram there is a     are not stable there is some fluctuation of
exchange between companies and                the factors and some times they go up
households of labour and goods. But           and sometimes they go done. In the light
when we speak for economy we cannot           of GDP when coefficient of this factor
mention and the role of the government        rises this means that the economy is
because the government is the institution     good which leads to growth in the small
thanks to which we have the term              companies, because there is a higher
economy. The role of the government is        demand for goods and the big companies
to maintain the balance between them,         can not satisfy immediately this demand.
stimulate when necessary, and provide         When we have a recession of the
security for the foreigner company which      economy this automatically leads to
are going to invest.                          closing some of the small companies
                                              which can not survive this recession. But
Introduction to Small and                     why we are stating that the small is
Medium Size Enterprises                       beautiful and big is powerful. When we
                                              have a recession big companies are more
       Until now we present what means        likely to survive because they can suffer
globalization, in some extent what is the     some economic losses which will not dive
role of the globalization in the economy.     them to a bankruptcy. When we have a
When we was speaking for economy we           small company some of them can
can know that we mean the relation            survive, but most of them will leave the
between companies, customers and              market because they can not suffer so big
government. When we speak in terms of         economic losses. On the other hand,
economic we understand that BUSINESS          when      the    market     change    small
is not created only by one enterprise. The    companies are created or the present
business contains a mix of different sizes    one are adapting to the market, so as to
of companies and enterprises. There are       respond to the customers demand. The
different sizes: small, medium and big.       big companies are responding slowly
The small and medium are grouped              compared to the small one, because they
under the abbreviation SME. The big           have to change some of their policy. The
companies sometimes are referred as           small companies are more adaptive to the
multinational, big, or blue chips. You can    changing economic situation. Following
ask what is the difference between them?      the idea which we presented till now, we
Is it only the name and the type of the       will arrive at the conclusion that SME are
company or there is something else? My        more adaptive to the market compare to
answer will be that there is something        the big companies. Since in the EU was
else. Most of the people now think that       introduced the Euro the EU commission
companies are measured only by the            created a table by which big companies
number of employees. This is not true.        can be differed from the others:
Companies are divided according their
turnover and number of employees.             Because Euro became a single currency
Before we go in a details of SME we need      in EU this was necessary to be done so
to understand what are the difference         as to be easier to distinguish different
between them and the blue chips. In the       sizes of companies by their annual
economy world there is a phrase “Small is     turnover.
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
                                              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
                  The           Lisbon        healthy. The euro has been successfully
Strategy                                      introduced and is delivering the expected
                                              benefits for the European economy. The
    Met in march 2000 in Lisbon, the head     internal market is largely complete and is
of states of government of the European       yielding tangible benefits for consumers
Union have launched the objective to          and businesses alike. The forthcoming
‘become the most competitive and              enlargement will create new opportunities
dynamic knowledge society in the world’       for growth and employment. The Union
by 2010. The measures that have been          possesses a generally well-educated
selected and acted upon since then are        workforce as well as social protection
known as ‘The Lisbon Strategy’.               systems able to provide, beyond their
                                              intrinsic value, the stable framework
                                              required for managing the structural
The new challenge                             changes involved in moving towards a
                                              knowledge-based society. Growth and job
                                              creation have resumed.
    The European Union is confronted
with a quantum shift resulting from                   These strengths should not distract
globalisation and the challenges of a new     our attention from a number of
knowledge-driven      economy.      These     weaknesses. More than 15 million
changes are affecting every aspect of         Europeans are still out of work. The
people’s lives and require a radical          employment rate is too low and is
transformation of the European economy.       characterised by insufficient participation
The Union must shape these changes in         in the labour market by women and older
a manner consistent with its values and       workers.         Long-term       structural
concepts of society and also with a view      unemployment and marked regional
to the forthcoming enlargement.               unemployment        imbalances      remain
                                              endemic in parts of the Union. The
    The rapid and accelerating pace of        services sector is underdeveloped,
change means it is urgent for the Union to    particularly     in    the    areas      of
act now to harness the full benefits of the   telecommunications and the Internet.
opportunities presented. Hence the need       There is a widening skills gap, especially
for the Union to set a clear strategic goal   in     information    technology     where
and agree a challenging programme for         increasing numbers of jobs remain
building    knowledge      infrastructures,   unfilled. With the current improved
enhancing innovation and economic             economic situation, the time is right to
reform, and modernising social welfare        undertake both economic and social
and education systems.                        reforms as part of a positive strategy
                                              which combines competitiveness and
                                              social cohesion.
The Union's strengths and
weaknesses
                                              The way forward
      The Union is experiencing its best
macro-economic outlook for a generation.
    The Union has today set itself a new      Council to be held every Spring will define
strategic goal for the next decade: to        the relevant mandates and ensure that
become the most competitive and               they are followed up.
dynamic knowledge-based economy in
the world, capable of sustainable
economic growth with more and better          Introduction
jobs and greater social cohesion.
Achieving this goal requires an overall              The European Union means many
strategy aimed at:                            things to many people, but it is
    • preparing the transition to a         undeniable that the EU is more than just
        knowledge-based economy and           the sum of its parts. It was created to help
        society by better policies for the    member states solve problems that
        information society and R&D, as       cannot be efficiently tackled by countries
        well as by stepping up the process    alone. The creation of the single currency
        of     structural    reform     for   were one of the milestones to European
        competitiveness and innovation        integration, that is key to EU’s future
        and by completing the internal        success.
        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
                                              The Euro
European Council needs to set a goal for
full employment in Europe in an emerging
new society which is more adapted to the      General information
personal choices of women and men. If
the measures set out below are                        Euro banknotes and coins have
implemented against a sound macro-            been in circulation since 1st January 2002
economic background, an average               and are now a part of daily life for over
economic growth rate of around 3%             300 million people living in the euro area.
should be a realistic prospect for the        It took only 10 years to get from the
coming years.                                 Treaty of Maastricht enshrining the
                                              principle of the single currency, to the
    Implementing this strategy will be        point where euro notes and coins were
achieved by improving the existing            circulating in 12 countries. The euro has
processes, introducing a new open             replaced currencies that were centuries-
method of coordination at all levels,         old symbols and now represents an
coupled with a stronger guiding and           instrument to create a common European
coordinating role for the European            identity.
Council to ensure more coherent strategic
direction and effective monitoring of
progress. A meeting of the European
The creation of the euro                             from 1 to 3 May 1998, the Union’s
                                                     political leaders decide that 11 EU
        The idea of a single currency was            countries met the requirements for
first born in 1970 and was mentioned in              membership for the euro-area.
the Werner report when the six members               They announce the definitive
of the EEC proposed a convergence                    exchange rates between the
between their economies and currencies.              participating currencies.
In June 1989 at the Madrid European                  1 January 1999: birth of the
Council, Commission President Jacques                Euro. The 11 currencies of the
Delors put forward a plan and a timetable            participating countries disappear
for bringing about an economic and                   and are replaced by the euro,
monetary union, which became a first                 which does become the shared
step in creating the single currency. Later          currency of Austria, Belgium,
other steps were taken that eventually led           Finland,      France,     Germany,
to the creation of the single currency:              Luxembourg, Ireland, Italy, the
                                                     Netherlands, Portugal and Spain.
      The Treaty signed at Maastricht                (Greece joins them on 1 January
      in February 1992. The treaty laid              2001). From this point onwards the
      down a set of criteria to be met by            European Central Bank takes over
      member states that were to qualify             from the EMI and is responsible for
      for EMU. These criteria all about              monetary policy, which is defined
      economic and financial discipline:             and implemented in Euro.
      the most important are: budget                 1 January 2002: euro coins and
      deficit cannot exceed 3% of GDP                notes are introduced. This is the
      for more than a short period of                start of the period during which
      time, limiting public borrowing to             national currency notes and coins
      a maximum of 60% of GDP and                    are withdrawn from circulation. The
      the currency’s Exchange rate and               period ends on 28 February 2002,
      prices must remain stable.                     thereafter only the euro is legal
      January 1994: the European                     tender in the euro area countries
      Monetary Institute was set up.
      The European Monetary Institute             The introduction of a single currency
      (EMI) is set up and the new             for many separate countries presents a
      procedures are introduced for           number of advantages and
      monitoring the EU countries’            disadvantages for the participating
      economies      and      encouraging     nations.
      convergence between them
      June 1997: the Stability and
      Growth Pact. The Amsterdam
      European Council agrees that the        Effects of a single currency
      “Growth and Stability Pact’ and the
      new exchange rate mechanism (a                 There are a number of clear
      re-born EMS) designed to ensure         benefits to having a single European
      stabile exchange rates between          currency    which  were    the   major
      the Euro and the currencies of EU       motivations behind the creation of the
      countries that remain outside the       euro.
      euro-area. A design is also agreed
      for the ‘European’ side of euro         Practical benefits for citizens: travelling
      coins                                   with the euro.
        May 1998: 11 countries qualify
      for the Euro. Meeting in Brussels
Internal market: reaping the full benefits     and businesses when exchanging from
of the EU's single market.                     one national currency to another.
                                               One of the most important benefits of the
Single financial market: benefits for          euro is lowered exchange rate risks,
savers and borrowers.                          which will make it easier to invest across
                                               borders. Before currency flutiations made
Macroeconomic framework: benefits of           it risky for companies or individuals to
a single currency to the economy as            invest or even import/export outside their
a whole.                                       own currency zone. The Eurozone greatly
                                               increases the potentially "exchange-risk
                                               free" investment area.
                                               At the same time, this is likely to increase
Practical benefits for citizens.               foreign investment in countries with more
                                               liberal markets and reduce that in those
With euro cash in their pockets, people        with rigid markets. Some people worry
can travel and shop throughout most of         that thus will see profits flowing away
the Union without having to change             from particular member states to the
Money. Another effect of the common            detriment of their traditional social values.
European currency is that differences in       It might also result in the reduction of
prices—in particular in price levels—          local decision makers in businesses
should decrease. This is supposed to
result in increased competition or             Single financial market.
consolidation      of   companies,     Price
transparency across borders should help                Another significant advantage of
consumers find lower cost goods or             switching to the euro is the creation of
services.                                      deeper financial markets. Financial
In reality, the effects of the euro over the   markets on the continent are expected to
level of the prices in Europe is disputable.   be far more liquid and flexible than they
Despite the official statistics, many          were in the past. There is more
citizens have stated the strong increase       competition for, and availability of
of the prices in the years after the           financial products across the union. This
introduction of the euro, and this have        will reduce the financial servicing costs to
been confirmed by field studies.               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
Single market.                                 been susceptible to economic problems
                                               such as inflation throughout the last 50
       There are the benefits of free          years. Inflation is a very damaging
movement of capital, people, resources,        phenomenon from most of society’s
services. Another benefit is the removal       perspective. It discourages investment,
of bank transaction charges that               can cause social unrest, and causes
previously were a cost to both individuals     problems for those on fixed incomes and
                                               for taxation. Many countries have been
unable or unwilling to deal with serious         Decision 3052/95/CE of the European
inflationary pressures but the European          Parliament and Council of Ministers dated
Central     Bank     modeled       on     the    the 13 December 1995 established a
Bundesbank is independent of the                 procedure of information exchange
pressures of national governments and            between Member States on national
has a mandate to keep inflationary               measures which derogate from the
pressures low.                                   principle of free circulation of goods within
        But as a matter of fact, the effect of   the Community.
the euro on prices in Europe is widely           There is ample case law of the Court of
disputed. Although the official statistics       Justice concerning Articles 28 to 30 of
from Eurostat show a moderate increase           the Treaty. This case law serves as a
in prices, many citizens perceive it not to      basis for a practical guide to the concepts
be the case. They feel that prices have          and application of Articles 28 to 30 of the
increased strongly and even exploded in          EC Treaty.
the years after the euro, probably               Since the case "Cassis de Dijon" the
because entrepreneurs rounded up their           principle of Mutual Recognition, has been
prices by its introduction, developed new        used in the process of free movement of
products or services that were not in the        goods.
official panel, and generally benefited of       The free movement of goods has
the weaker control that consumers had            generated nearly €900 billion in extra
over the prices.                                 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
            The Benefits                         increased from 6.9% of the EU GDP in
of the Single Market                             1992 to 11.2% in 2001.
                                                 It has boosted purchasing power through
                                                 pressure on prices, the gap between the
50 years from the Treaty of Rome (1957)
                                                 EU’s highest and lowest prices has been
to the EU (2007)    Economic and social
                                                 narrowing; some goods are cheaper in
progress
                                                 absolute terms, the free movement of
There have been three key milestones
                                                 goods has generated nearly €900 billion
since the EU has been founded:
                                                 in extra prosperity-about         €6000 per
    - Creation of Customs Union
                                                 household- in its first ten years.
    - The Single Market
                                                 It has contributed to a 30% increase in
    - Economic and Monetary Union
                                                 trade in manufactured goods in the EU
                                                 since 1992, thus increasing the selection
The principle of free movement of goods
                                                 of goods available and increasing
is one of the cornerstones of the internal
                                                 competition.
market. This principle implies that
                                                 It has made the EU more internationally
national barriers to the free movement of
                                                 competitive. For example EU export to
goods within the EU be removed.( see
                                                 countries outside the EU increased from
www.ec.europa.eu)
                                                 6.9% of the EU GDP in 1992 to 11.2% in
Article 28, 29, and 30 of the EC Treaty
                                                 2001.
which prohibit measures which have an
                                                 It has boosted purchasing power through
effect     equivalent     to   quantitative
                                                 pressure on prices. The gap between the
restrictions in intra Community trade.
EU’s highest and lowest prices has been            -   “Inform citizens; ensure strict
narrowing; some goods are cheaper in                   compliance with existing
absolute terms.                                        Community law; make Community
Definition: “this freedom enables citizens             law on the free movement of
of one Member State to travel to others,               persons easier to understand and
alone or with their families, to work there            to restructure it around the concept
(permanently or temporarily), to visit                 of "citizenship of the Union";
places as tourists or simply to live there.            consider substantive changes to
The idea behind EU legislation in this field           existing law.” (conclusions
is that citizens from other Member States              suggested by EU officials:
should be treated equally with domestic                http://europa.eu/ ).
ones – they should not be discriminated            -   Adjusting of the welfare systems
against.” (Wikipedia Encyclopaedia).                   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                This articles are the result of our personal
                                               elaboration.
  - 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 Rights-
    2000)
  - Patent system
  - European Year of Equal
    Opportunities, anti-discrimination
    policies
  - Eastern European Countries
    feeling disadvantaged because of
    ‘transitional periods’.
  - Fear of losing national identities
Next Number:                                  Elsa María González Fernández
Welcome Bulgaria
Welcome Romania                               The Euro and Democracy: future Challenges
                                              Rampino Vittorio
       “THE EURO AND DEMOCRACY”               Pavlu Darina
                                              Menshikova Ekaterina
          New Bulgarian University

    Professori Jean Monnet di Studi Europei
            Commissione Europea

           Atelier: “I Mediterranei”
   South/East Dialogue – Thematic Networks
             SEDEIC Consortium                European Commission
                                                 • Directorate General for Education and
     Friday 20th & Saturday 21th October             Culture
                     2006
     Venerdì 20 e Sabato 21 Ottobre 2006      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

								
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