This website uses cookies to ensure you have the best experience. Learn more

The Possible Effects Of The Uk Entry Into The Euro On Foreign Trade And Foreign Direct Investment In The Country.

1491 words - 6 pages

The Euro has been in years in the making. The Treaty of Rome (1957) declared a common European market as a European objective with the aim of increasing economic prosperity and contributing to "an ever closer union among the peoples of Europe". The Single European Act (1986) and the Treaty on European Union (1992) have built on this, introducing Economic and Monetary Union (EMU) and laying the foundations for our single currency. The third stage of EMU began on 1st January 1999, when the exchange rates of the participating currencies were irrevocably set. Euro area Member States began implementing a common monetary policy, the euro was introduced as a legal currency and the 11 currencies of the participating Member States became subdivisions of the euro. Greece joined on 1st January 2001 and so 12 Member States introduced the new euro banknotes and coins at the beginning of this year. The successful development of the euro is central to the realization of a Europe in which people, services, capital and goods can move freely. The introduction of the Euro is the largest monetary changeover the world has ever seen.12 Member States of the European Union are participating in the common currency. They are Belgium, Germany, Greece, Spain, France, Finland, Ireland, Italy, Luxemburg, Netherlands, Austria and Portugal. Denmark, Sweden and the United Kingdom are members of the European Union but are not currently participating in the single currency.International trade takes place between countries, it takes place because of specialization, and hence, because of comparative advantage. Countries will specialize in the production of those items in which their comparative advantage is greatest. A country has a comparative advantage over another in the production of an item if it can produce that item at a lower opportunity cost. No barriers to trade exist in free trade, no protections exist, and such means of protection includes tariffs, taxes, restrictive practices such as cartel, subsidies, quotas, opportunity cost and factor-endowment, etc. Advantages of free trade are: jobs can be saved as imports would be reduced; protectionism can cause inflation, e.g., tariffs, less competition; free trade is more efficient including allocative and productive efficiency; consumer sovereignty remains as consumers would have a wider ranger of goods in the market.So what effects will it have on foreign trade with the UK joining this single currency? Will trade be boosted? If the UK decides to join the Euro, it will be joining the largest single market in the world outside the US. As a result of this, business can be sold more widely, achieving economies of scale. It also allows families and businesses to buy from a wider, and so cheaper, range of suppliers. These are factors to boost trade and increase our prosperity. *A previous study has shown that two countries sharing the same currency trade three times as much as two countries with different currencies. Having a...

Find Another Essay On The possible effects of the UK entry into the Euro on foreign trade and foreign direct investment in the country.

Foreign Direct Investment in China Essay

1543 words - 6 pages over the past 20 years. China's explosion on to the world investment, production and trade scene is the product of its size, growth and openness. This is leading to tremendous changes in the global economy. China has become the second largest foreign direct investment recipient country in the world and the largest recipient among developing countries. Since 1978 the foreign direct investment has flooded into the country. In 2002 china became

Foreign Direct Investment In KOREA Essay

2072 words - 8 pages August, we feel that this is a temporary decline. In fact, FDI in September is rising sharply again.Korean FDI environment of today is rapidly changing and improving. The first stage of financial sector restructuring was completed in September 1998, and the Foreign Investment Promotion Act will come into effect in December of this year. Therefore, we expect foreign direct investment in Korea to continue to increase.

Foreign Direct Investment in Vietnam

2503 words - 10 pages Foreign Direct Investment in Vietnam There is no dout that foreign direct investment (FDI) plays a very significant role in economic growth, according to experiences of new industrial countries in Asia. Over a decade of opening for FDI, we could realize that the more FDI inflows pour into our country the more we benefit. In fact, FDI has contributed a great proportion to fulfill targets on socio-economic development plan and has been one of

Foreign Direct Investment: Country Risk Assessment of Spain

5343 words - 21 pages ;Forecast 5 Years:     2 International firms in Spain is a special kind of in dicator in the economic sector of foreighn direct investment. Depending on how many firms and what kind of business they are doing abroad shows a strong in tension of foreign firms to invest there. Spain is not a developing nation in industry and manufactoring , but a place to start investing in technology and information sector.   &nbsp

DOES COLLECTIVE BARGAINING DETER FOREIGN DIRECT INVESTMENT IN THE VEHICLE INDUSTRY

2402 words - 10 pages BARGAINING The effects of unsuccessful collective barraging means: o Lower economic growth o Lower domestic and export production and sales o Reduced industry profitability o Substantial loss of income to workers o Loss of revenue to the fiscas o Lower foreign direct investment into South Africa o Decrease in employment Ultimately there are no winners in a strike, especially in the motor industry which produces stable employment for South

Direct Foreign Investment

1554 words - 6 pages investment was driven by the decline in investment from the USA and electronics, telecom and business services.However EU enlargement will not only have adverse affects on present member countries, it will give for example the potential for direct foreign investment by the UK into new member countries where the potential growth is high, in the future this should hopefully bring a net flow of investment income and thus boosting the UK GNP and balance of payments.

Does Inward Foreign Direct Investment Boost the Productivity of Domestic Firm

1127 words - 5 pages Haskel, Pereira, and Slaughter, (2007), referred to the writers in this assignment, in the article ‘Does inward foreign direct investment boost the productivity of domestic firm’ aimed to answer two main areas. First, the question was compost; are there productivity spillovers from FDI to domestic firms? And secondly, how much should host countries pay to attract FDI? (Haskel, Pereira and Slaughter, 2007). Therefore, the first part of this

Foreign Direct Investment (FDI)

1683 words - 7 pages the second most important FDI destination (after China) for transnational corporations during 2010-2012.As per the data, the sectors which attracted higher inflows were services, telecommunication, construction activities and computer software and hardware. Mauritius, Singapore, the US and the UK were among the leading sources of FDI.FDI in 2010 was $24.2 billion, a significant decrease from both 2008 and 2009.[9] Foreign direct investment in

Foreign Direct Investment

1764 words - 7 pages Introduction: Foreign Direct Investment, or FDI, is a type of investment that involves the injection of foreign funds into an enterprise that operates in a different country of origin from the investor” (economy watch). The determinants of foreign direct investment may be the socio-economic, financial and the cultural factors which usually have positive and negative effect on the foreign direct investment. The risk is attached to the

foreign direct investment

1114 words - 4 pages Foreign direct investment (FDI) is a direct investment into production or business in a country by an individual or company of another country, either by buying a company in the target country or by expanding operations of an existing business in that country. Foreign direct investment is in contrast to portfolio investment which is a passive investment in the securities of another country such as stocks and bonds.Foreign Direct Investment "as

Foreign Direct Investment (FDI)

2503 words - 10 pages transfers capital or some other asset to acquire a foreign direct investment, the asset is a type of production factor. Production factors: capital, technology, trademarks, managers, raw material, ....If trade could not occur and production factors could not move internationally, a country would have to either forgo consuming certain goods or produce them differently, which in either case would usually result in decreased worldwide output and

Similar Essays

The Differences Between Foreign Trade And Foreign Direct Investment

1796 words - 7 pages services increasing. This natural trade is here for centuries, but now we have better logistics and faster shipments and cooperation between countries is easier. Problems that traders are facing are in general different currencies, law systems, regulations and somewhere trade barriers. Foreign direct investment (FDI) Investment from one country into another (normally by companies rather than governments), that involves establishing operations or

The Impacts Of Foreign Direct Investment In China

3592 words - 15 pages (2009). Foreign Firms and Chinese Employment. World Economy 32(1): 178-201 Kirkulak, B., Qui, B & Yin, W (2011). The impact of FDI on air quality: evidence from China. Journal of Chinese Economic and Foreign Trade Studies 4 (2): 81-98. Liu, H (2011). The importance of properly assessing social, environmental and political risks in foreign direct investment in Chinese IT industry. International Journal of Trade, Economics and Finance 2(3

Attracting Foreign Investment Into The Netherlands: A Focus On Biofuels

3566 words - 14 pages machinery. A highly mechanized agricultural sector employs no more than 3% of the labor force butprovides large surpluses for the food-processing industry and for exports. The Netherlands, along with 11 of its EU partners,began circulating the euro currency on 1 January 2002. The country continues to be one of the leading European nations forattracting FDI (foreign direct investment) and is one of the ve largest investors in the US. The economy

Evaluate The Costs And Benefits To Modern Business From Engaging In Foreign Direct Investment

1925 words - 8 pages enterprise, promote the internationalized operation of the enterprise and reinforce or improve the international competition advantage of the enterprise. According to the foreign direct investment questionnaire made by Ministry of Commerce in Chin in March of 2006, the current purposes of Chinese enterprises on the foreign direct investment include: 1. To transfer the domestic superfluous production and technology capacity of the host country. 2