International Economic Integration

One of the issues that has recently dominated the economic policy debate in the Federal Republic of Germany, just as it has in many other western industrialised nations, is the question of how attractive it is for enterprises to invest in this country rather than choosing some other location elsewhere in the world. In the area of technology-intensive products especially, a sector in which Germany has traditionally been a strong exporter, the international competitive advantages possessed by German enterprises have noticeably eroded. At the same time, the production factor capital has, in the course of the last few years, become very much more internationally mobile (Klodt 1990; UNCTAD 1987, UNCTAD 1994).

The debate about a so-called European hard core, as well as about the widening and deepening of the European Union, demonstrates that, as a result of the increasing numbers of EU member states, it is time to take stock of the concept of European integration and the future structure of the European Union (EU). Widening the EU by allowing new members and deepening the institutional regulatory mechanisms within the EU are two ambitions which are somewhat at odds. Europe is heterogeneous. Even within the EU there are significant differences between countries, and if the former communist countries in Eastern Europe were to be included, the economic and political differences would be extreme. Measuring the differences between the Western countries, for example, by using affluency criteria (see Tichy 1992, pp. 131 – 132), shows that Europe is divided between the wealthy North and the Core (Scandinavia, the Benelux countries, Germany, Switzerland) and the poor South and periphery (Ireland, Portugal, Spain, Greece, the former Yugoslavia, Turkey), with several countries in between. Measuring the differences, on the other hand, by using the priority countries give to price stability in their economic policies shows that Europe is divided between a “stability group” (Germany, the Netherlands, Switzerland, Austria, France, Belgium) and an “inflation group” (Italy, Spain, Greece, Portugal, Turkey, Iceland), with several countries in between.

The Belgium-Luxemburg Economic Union (BLEU) has never created much interest. The few articles devoted to it are not of very recent date. The best known is the short survey by J. E. Meade (1962). In this paper I shall consider successively — after a brief introduction — the characteristics of the Union, the nature of the monetary association and the dangers threatening this association, namely substantial capital movements and a persistent deficit on current account. A comparison with the European Community (EC) is followed by a concluding commentary.

Since the early 1980s structural adjustment programmes have become the dominant instrument to improve the institutional and policy framework within which traditional development assistance in the form of lending for individual development projects is embedded. While development institutions, practitioners and scientists alike look at projects as “the cutting edge of development” (Gittinger 1982, p. 3), it became increasingly clear that lending for individual projects alone is unable to cope with the complexity of development issues. A sound economic policy and an institutional environment supporting development are seen as important as a well working technological package for development projects to achieve their objectives. As a result, increased emphasis has been placed in development co-operation on creating an economic policy and institutional environment that is conducive to economic development in general and project performance in particular.

Regarded generally, international economic integration is comprised of all the forms of international economic interdependence. Such interdependences may arise from the mutual exchange of goods, services, and production factors, i.e. from the interlacing of markets (market integration). Economic integration, however, may also be caused by a common incorporation of certain fields of politics into a new central institution (political integration or institutional integration). Furthermore, integration may refer to specific sectors or branches (e.g. the agricultural market or aircraft construction); but otherwise it also may refer to overall relations and the way in which they are influenced, for example, by a general reduction of taxes and duties or by the lifting of capital or exchange controls against trading partners (Ohr 1994a, p. 147).