The elimination of trade barriers brought more open trade between
European countries. The countries converged into a sort of common economy, as
if they were the states of a single country (Rittenberg and Tregarthen, n.d.). Regarding
this system, one exciting thing we can think of is that now a German citizen
should be able to pay his food bill at an Italian restaurant in Spain with a
Euro banknote printed in France. So, it can be said that the establishment of
the Euro-zone promoted open exchange of goods and services throughout the
region.
The removal of barriers developed the concept of a Single Market, a market in which both people and businesses could liberally
propagate across territories in Europe. If we consider the facts, the market
has grown from 345 million to 500 million consumers, and trade has grown from
€800 billion to a massive €2,800 billion (European Union, 2012). The adoption
of Euro by many countries removed the transaction costs for currency exchange,
and removed currency risks, all of which boosted the trades. One vital figure
we can see is that, as a result of a free market, Euro-zone was able to
generate an additional estimated €330 billion GDP in 2010 (European Union,
2012). Thus, we can easily say that elimination of barriers automatically
improved productivity within EU.
Likewise, the stronger economies were able to invest their capital on
undiscovered alternatives present in weaker economies, and the weaker economies
got access to the market with richer consumers. This created exactly the right
environment for both rich and comparatively poor nations to flourish their
trade capabilities. Therefore, EU’s output improved significantly when the
restrictions were lifted.
References:
Rittenberg L., Tregarthen T. (n.d.), Confronting
Scarcity: Choices in Production, Principles of Economics.
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