The three main global economic powers have been brought together by globalization, with the United States, China, and the European Union being the largest players in the world economy. The European Union is unique among these three major powers in its level of economic integration, but this integration has also drawn criticism from some who believe that mistakes have been made along the way.
Critics of the European integration process argue that the European Union’s decision-making processes have resulted in patches being used to solve problems rather than long-term solutions. They believe that the process of integrating national economies and ceding sovereignty to European authorities has been less than successful.
However, there are others who are more pro-European and believe that there is still room for progress in the path of economic and political integration. They argue that the European Union’s role as a supranational organization is not to replace national governments, but to provide a service to the European citizenry through the creation of European organizations and institutions.
These institutions and organizations operate through a series of treaties that unite the different national sovereignties with common goals that must be achieved. The member states are obligated to comply with the fixed commitments outlined in the directives and provisions set by the European authorities, and must work to achieve the goals set by these authorities within a specified deadline.
However, despite the obligations set forth by the European authorities, member states have the flexibility to implement measures they consider appropriate to achieve these goals. Ultimately, the goal of the European Union is to create a unified and harmonious economy, with a focus on the welfare of its citizens and the stability of the global economy.
The European Institutions Let’s start by explaining what the main European institutions are. In this sense, it is worth mentioning four institutions: the Commission, the Council of Ministers, the European Parliament and the Court of Justice.
- The Commission. It holds the executive power in the European Union and is responsible for drawing up the European policies that will later be studied and approved by the council of ministers.
- European Council. Formed by the heads of government of the member countries, the representative of the Common Foreign and Security Policy of the European Union and the President of the Commission. Its work will consist of determining what the European policies are.
- Council of Ministers. It is made up of the ministers of each member state and has a great weight in decision making.
- European Parliament. Its members are elected by the European citizenry. It holds legislative power, has supervisory functions and is also responsible for the European budget.
In regards to the Court of Justice. Being a judicial body, it is independent of the executive and legislative bodies. It is responsible for determining if any state has The European Union not only develops politically but also economically, requiring a series of economic institutions that act independently of political powers. Three such institutions are the Court of Auditors, the European Central Bank, and the European Investment Bank.
- The Court of Auditors: With its headquarters located in Luxembourg, it acts independently to control the correct use of European funds.
- European Central Bank (ECB): It is the body responsible for executing monetary policy. It determines the price of money and the amount of money in circulation to ensure stable prices and fight inflation.
- European Investment Bank (EIB): It addresses important European investment projects in the less developed regions of the Union. It finances infrastructure, supports companies in creating jobs, and funds environmental projects. In other words, it is responsible for financing and supporting development in the European Union.
European Policies and Funds European common policies deserve special attention, as they are directly related to the economy. With the goal of establishing common regulations, defending productive sectors, and improving competitiveness, these policies aim to achieve the following objectives: • Creation of jobs • Boosting competitiveness • Economic growth • Improving the quality of life for Union citizens • Sustainable development This regional policy is based on structural funds and cohesion funds, which are dependent on the European Commission. Some of the most important European funds are:
- European Regional Development Fund (ERDF). It is intended to boost the balanced development of different regions in Europe.
- European Social Fund (ESF). Its purpose is to finance projects that promote employment.
- European Agricultural Fund for Rural Development (EAFRD). It is dedicated to rural issues in the European Union.
- European Maritime and Fisheries Fund (EMFF). It seeks to boost sustainable fishing and improve the quality of life for those living in coastal areas.
- Community budget A fundamental element for the functioning of the European Union is the community budget. Funding European policies requires a well-organized and structured budget. However, the community budget only accounts for between 1% and 2% of the GDP of all member states. As mentioned earlier, the community budget finances European policies. Among the policies that absorb the most resources are the Common Agricultural Policy (CAP), structural funds, and cohesion funds.
The Stability and growth pact, also known as the European Stability pact, is a set of rules agreed upon by the European Union in response to the 2008 financial crisis. The main objective of the pact is to establish discipline in public debt and deficit management. The rules of the stability and growth pact include the following:
- A maximum structural deficit of 0.5% of Gross Domestic Product (GDP) for states with public debt below 60% of GDP, and a maximum of 1% for states with public debt above 60% of GDP.
- States with public debt above 60% of GDP are required to reduce it by one-twentieth each year.
- Mechanisms are established to correct any deviations from the goal of reducing the public deficit.
- Sanctions may reach a maximum of 0.1% of GDP in the event of non-compliance.
In addition to these rules, the stability and growth pact also aims to promote economic growth and stability in the European Union by ensuring responsible fiscal policy among its member states. Key words: European Union, financial crisis, public debt, deficit management, Gross Domestic Product (GDP), economic growth, stability, fiscal policy.
