LECT.

Laura Elena MARINAS, PhD

Dept. for International Business and Economics
laura.marinas@rei.ase.ro

Lectures and discussions on:

Basic concepts and theories of economic and monetary

regional integration
History of European economic integration
EU regulatory and institutional fraemwork. Decision
making in the European Union.
EU single market
Economic and monetary union. The Stability and Growth
Pact.
EU competition and cohesion policies
EU competitiveness, inovation and development tools
and strategy
EU enlargement policy
European economic regionalization
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Laura Elena Marinas, European economic

integration Reader and ppt presentations,
2015;
Baldwin R., Wyplosz C., The Economics of
European Integration, McGraw Hill Higher
Education. 2010
De Grauwe, P., Economics of Monetary
Union, Oxford University Press, 2012
Pelkmans J., European Integration:
Methods And Economic Analysis, 3rd eds.
inancial Times/Prentice Hall, 2006.

Final grade will be assigned as follows:

-final exam: 70%
-seminars: 30%

participation, assignments and exercises: 20%

essay: 10%

Microenomic vs. Macroeconomic

Static view vs. Dynamic view
Positive integration (pro active approach,
harmonization of policies etc.) vs.
Negative integration (liberalization,
removal of barierrs etc.). Both targeting
freedoms of movements and
harmonization
Deeper integration vs. enlargement

economic integration is mainfold:

refers to the absorption of a company in a larger
concern (e.g. Dacia - Renault)
refers to the integration of regional economies in
a national one (has a spatial aspect)
related to international economic relations, (to
indicate the combination of the economies of
several sovereign states in one entity (EU).

Economic integration is not an objective in

itself, but serves higher objectives:
Economic, objective (immediate objective):
to raise the prosperity of all cooperating units.

Peace policy (farther-reaching objective):

to lessen the chance of armed conflicts among
partners.

Two or more countries when they

reduce their respective duties on
imports of all goods (except
services of capital) from each
other, retaining their original
tariffs against the outside world

Two or more countries when they remove

import duties and quantitative restrictions
in their mutual trade in all goods (except
services of capital); maintaining country
based tarrifs against third parties

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Two or more countries remove import duties

on their mutual trade in all goods and
or/services (and, in addition, adopt a
common external against third parties

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Custom union + freedoms of

movements (goods, services, captials,
workforce/citizens)

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Common market +common policies

If common monetary policies and/or
common/single currency added= monetary
union
If both monetary and economic policies
become common = economic and monetary
union
If all policies become common (monetary
policy included) = full economic union

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Economic regional integration = the integration of markets.

Basic principles:

Free movement of goods and services - the obvious welfare

gains from the liberalisation of product markets are a good
economic reason to start integration with that object.
Free movement of production factors - another basic element of
economic integration (allows optimum allocation of labour and
capital).

A second argument is that an enlarged market of

production factors favours new production possibilities
which in turn permit new, more modern or more efficient
uses of production factors (new forms of credit, new
occupations, etc.).
Policy approximation: In an economy which leaves
production and distribution entirely to the market, the
elimination of obstacles to the movement of goods and
production factors among countries would suffice to
achieve full economic integration.

The static sense of economic integration:

a situation in which the national components of a larger

economy are no longer separated by economic frontiers but
function together as an entity.
the static meaning of the expression will apply in full once the
integration process has passed through its stages and reached
its object.
elimination of economic frontiers at one moment for all member
states

The dynamic sense of economic integration:

indicates the gradual elimination of economic frontiers among

member states (the abolition of national discrimination), with
the formerly separate national economic entities gradually
merging into a larger whole.
the dynamic interpretation is the more usual.
Gradual elimination of economic frontiers, and member states
merge step by step.

 the elimination of obstacles

measures taken are often of
the simple Thou shalt not'
type: they can be clearly
defined, and once
negotiated and laid down in
treaties, they are
henceforth binding on
governments, companies
and private persons.
There is no need for
permanent decision-making
machinery.
Whether these measures are
respected is for the courts to
check, to which individuals
may appeal if they consider
their interests damaged.

Negative Integration:

the creation of equal conditions

for the functioning of the
integrated parts of the economy
It may take the form of vaguely
defined obligations requiring
public institutions to take action,
leaving room for interpretation as
to scope and timing.
May be reversed if the policy
environment changes;
consequence: uncertainty for
private economic agents (who
cannot derive any legal rights
from them)
Is the domain of politics and
bureaucracy rather than law and
it doesnt present a built-in
stimulus for progress.
Politicians are more likely to opt
for positive rather than negative
integration - progress is slower,
the higher the stage of
integration is.

Positive Integration:

IMPORTANT: all member states have to

agree upon the issues and measures taken
for policy integration!
For an efficient policy integration, common
institutions (international organisations)
are created.
For the higher forms of integration
(common market) the transfer of power
from national to union institutions is
required.

All forms of integration diminish the

freedom of action of the member states'
policy-makers.
(the higher the form of integration, the greater
the restrictions and loss of national
competences).

The higher the integration, the greater the

restrictions
Information (national competence
unaltered)
Consultation (national competences
affected)
Co-ordination (limitation of national
competence)
Unification (national competence
abolished)
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Realism states folllows own interest and

cooperation is possible if it can give states
possibilities to better pursue interest
Intergovernamentalism states set up
limits of competences for regional
institutions; pursuit of common goals of
security and economic development,
formalization in the treaties, principle of
conferral
Supranationalism transfer of decision
making to regional institutions
Functionalist/neofunctionalist view
spillover effects

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