EU's Economic Regionalism: Crisis, Weaknesses, and Lessons

This essay delves into the complexities of economic regionalism within the European Union, with a particular focus on its performance during and after the global financial crisis of 2008-2010. The introduction establishes economic regionalism as a mechanism for facilitating the flow of goods and services, and the essay highlights the EU's role in promoting intra-regional cooperation and integration. It examines the evolution of economic regionalism within the EU, discussing its impact on trade balances and the potential drawbacks, as well as the shift in trade patterns during the crisis. The main body of the essay analyzes the EU's response to the global financial crisis, exploring how the crisis exposed weaknesses in the region's approach to economic regionalism. The essay also investigates the post-crisis performance of EU regionalism, assessing whether the economic integration framework was able to navigate the situation. The conclusion offers insights and lessons for other economic regions, synthesizing the findings and providing a comprehensive overview of the subject.

Running head: INTERNATIONAL POLITICAL ECONOMY
International political economy
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Introduction:
Economic regionalism is acknowledged as the institutional arrangement designed in
order to facilitate the free flow of goods and services to the different economic zones and
while coordinating with the foreign economic policies. Economic regionalism can be
regarded as the continuous attempt to handle and manage the constraints and opportunities
established by the dramatic rise in the international economic ties since the fame of World
War II and it has been enhancing the cooperation between the different economic zones
around the world (Francis 2017). As the outcome of the economic integration, during the last
six or seven decades there has been various development in the form custom unions, Free
trading areas, economic unions and others. apart from the these international bonding
between the world economies, over the last three decades as the form of the economic
regionalism, it can be seen that one new type of economic regionalism has been taking place
within the regional economies allowing them to provide level playing ground and better
trading prospect resulting better trade performance of the regional trading partner (Cai 2016).
one of the outstanding example of the same can be found in case of the European Union (EU)
nations, where the member countries are indulged with trading within the regional economic
in large magnitude compared to the other economies around the world providing them better
trading scenario as well as higher trade balance to each of them.
This essay is aimed to discuss the economic regionalism within the EU nations and
trace out how it has performed through the various crisis situation. It will the reader to
determine the magnitude of economic regionalism among the European nations and
understand how good or bad it has performed through the economic crisis like situation. Main
focus of this essay will be on the recent Global Financial Crisis (GFC) scenario, where the
world economy has it second largest financial crisis post Great Depression. In addition to
this, the essay will try to find out how well the economic regionalism in the EU regional has

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been performing post the financial crisis so as to determine the performance of the EU
economic regionalism during the time of recovery from the financial crisis like situation.
Regionalism in EU:
EU acknowledge itself as a profound model of legitimate and effective governance
that can be emulated by the other regions and countries in order to face better economic
integration with the trade participating nations (Garzon 2017). in addition to this, EU actively
promote the growth of the intra-regional political and economic cooperation that build the
issue related regime and germination of joint institutions for the decision making and
consultation within its trading zone specially within the local region where its member
countries operate. Since the 1980s EU member countries are highly indulged with the
exploration and enhancement of the regional economic integration in order promote better
international relationship through better trading prospect and higher amount of the balance of
trade (Park et al. 2018). Through the studies from different principal of the regional economic
cooperation among the member countries, it can be seen that EU largely focus on diffusing
the regional integration that allow the non-EU countries to understand, experience and utilise
the same in order to enhance economic performance of the said economy. as the method of
the diffusion it can be seen that EU utilise manipulation of utility calculations and
socializations work that allow the idea of economic regionalism to spread to the different
parts of the world economy (Sunkel et al. 2016). However there is certain amount of
questions regarding the necessity of the economic regionalism within the EU framework and
in other parts of the world economy. As per the economists like Carranza (2017), economic
regionalism rather expanding the trading capability, trading balance of the trading partners,
reduce the scope of trading for the participating nations. As the participating nations remains
focused on the economic integration with the regional economies, they completely overlook
the broader scenario of the world economy leading to fall in the trade opportunities. as

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example, it can be seen that, England and France post World War II was mainly focussed to
trade with the regional economies for the mutual growth of the both (Soderbaum 2017).
However, in present date understanding the loss of the trading scope, these countries has
largely focussed on the international trade rather than depending upon only on the regional
economies. Contrary to this, smaller countries of the EU believes that depending upon the
economic regionalism is good for their interest because it will allow the small countries to
protect them from the large market players in the international market and let their trading
potential grow (Gilpin 2018). As per the latest data, it can be seen that within the EU
Germany, France, Italy and Netherlands are the largest traders considering their export values
and most of the export is directed towards the third world countries depicting the economic
regionalism on hold within the EU region during the present date. However, if the data of the
1980 to 2000s is considered, then it can be seen that, same countries directed their most of the
exports to the regional economies showcasing a paradigm shift in case of the economic
regionalism (Telo 2016). Now, this shift may be arisen for the recent GFC like situation or
any other instance or it has simply be so due to the inefficiencies within the operational
framework of the economic regionalism. Next section of this essay will put focus on the same
and portray how economic regionalism has performed during and post GFC like scenario
sourced by the subprime mortgage crisis in the US market taken place since 2008 to 2010
(Molle 2017).
Regionalism in EU during Global Financial Crisis:
Global Financial Crisis that took place since 2008 to 2010 is one of the largest
financial crisis in the world that shook overall all the economies around the world more or
less. Sourced by the subprime mortgage crisis in the US economy, caused huge loss and
slump to the trading proposition of the western countries because GFC has influenced them
most (Wunderlich 2016). In addition to this, GFC led to massive loss of wealth and serious

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slowdowns of the economy around the world and reversed the growth of the world trade
forcing the financial institutions to come in for rescue the unprecedented scale of the
monetary loss. In order to overcome the dramatic situation of the world economy,
international monetary agencies such as International Monetary Fund (IMF), World Bank,
European Union (EU) and the other major international central banks took rigorous attempt
to conceal the situation through the various fiscal and monetary stimulus packages (Dent
2016). Market was under the death trap, where the price of the products were rising
exorbitantly in absence of the output and the largest slump can be seen in case of the housing
sectors around the world. As the reason of the GFC like situation, it has been found that loss
of the legitimacy of the UK-US vision of self-regulating financial market as well as lack of
confidence for the developed countries, financial institutions and the economic governance
has caused the rise in the uncontrolled trade between the developed and developing economic
causing weakening the effectiveness and legitimacy of the international trading (Telo 2014).
In case of the EU member countries it can be seen that lucrative market of the Asian
economies and other developing state has attracted the developed nations. Challenging
generalizations of nationalist belief system by upholding a liberal rationality, regionalism
remains for an autonomous power to the economic entities that enhance the growth of the
nations through the liberalised trading. For instance, Scotland additionally incorporating it
inside the EU the gathering upheld the Euro from the beginning, and its administering
organization has endeavoured to characterize. As the EU wears down national power, with
the presentation of the Euro in 2001 or the shiny new arrangements of a President and
Foreign Minister in late 2009, it normally winds up increasingly hard for nations like
Belgium to keep up an officially dubious national mental self-portrait (Brennan et al. 2015).
Individuals who have constantly inclined toward economic regionalism think that it’s less
demanding to do as such as the EU reduces the part of the country both in famous creative

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ability and in giving individuals a feeling of wellbeing. Thus, when it comes to economic
regionalism, then it can be seen that there has been large number of the member countries
who under the global financial crisis situation was thriving for the new markets to sell their
already overproduced products. Under the economic regionalism during pre GFC like
situation, it can be seen that effect of the same has been faced on a large scale by the western
European regions and the states from the US (Beeson 2014).
Regionalism in EU post Global Financial Crisis:
From above, it is promptly observed that unequivocal extensions and constrictions in
the provincial elements has constrained and proved the economic regionalism a failure. It
failed the EU member nations to overcome the situation of the GFC like situation, however,
is it still functional within the regional economy of EU (Brennan et al. 2015). The answer is
yes, because slowly European trade is again shifting towards the regional integrity under the
newly developed operational framework of the economic integration where the countries not
only consider the neighbouring countries as the regional economies, rather a broader
perspective of the same can be observed. Through the initiation of the groups like G20 and
others, EU has tried to bring in most lucrative economies around the world under the regional
economic framework and to have better economic and trade growth in future (Murray et al.
2015).
This new time of provincial character and joined objectives acquired the signs of
European regionalism found in recent times. Generally, as demonstrated by the early history
of the EU as it is known today, regionalism was more promptly communicated amid its
introduction to the world by financial activities and the drive for incorporated, single markets.
The European Coal and Steel Community (ECSC) especially, supported its reality as a
methods for making war substantially inconceivable, by pooling together normal assets, in
this way organizing peace in the turbulent early years following the finish of the Second

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World War (Curran 2017). The quick consequence of the ECSC was a more prominent
feeling of peace amongst France and Germany, with possible standardization as the long haul
impact of the ECSC's presence that strengthen the economic regionalism in future. Presently
however, the EU advances and executes economic regionalism, aggregate booming, zones of
basic strategy and monetary advancement inside the EU zone through the making of its
representing establishments (Zimmerman et al. 2017). For example, the European Council,
European Parliament and the European Commission came into existence in present date that
looks after the calmness and the pace of the regional trade among the European trading
partners. Monetarily, it has presented a regional market and the utilization of the Euro as a
typical money through the foundation of the European Central Bank. At present date, the
Euro Zone has posted a moderately stable 20.7% business growth rate, with the EU-27
posting a nearby second with 19.9% while business benefit shares have kept on ascending in
the Euro Zone as esteem augmentations climbed speedier than wage costs post GFC like
situation through the modification of the economic regionalism (Gillespie 2015). While
monetary activities are not amazingly a long way from the purview of EU seeks after its
provincial financial objectives, however, the overseeing structure and foundations of the EU
and of its participating states obstruct the accomplishment of economic integration between
the states which leaves creation and annexation altogether to the regional market in present
date. It appears to be however, that with a populace of 502.5 million as of the beginning of
2011 the EU-27's populace and by expansion its work drive, financial potential and efficiency
are still consistently expanding, enabling the European Union's economy to rival other
famous economies and a large share of credit of the same goes to the economic regionalism
(Brennan 2015).
Government intercession as well, has likewise added to the advance of the EU zone
and the mainland all in all regardless of the by and large adverse faith in government

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mediation in monetary issues. Shared skills between the EU and the administrations of part
states, for example, financial approach, inside business sectors, agribusiness and fisheries of
the European Union have all advanced to meet EU focuses for monetary advancement. In
expansion to the over, the EU has extended its scope a long ways past financial matters.
Matters of normal security, outside approach, spending plans, vitality and condition and
additionally outer activity are as of now inside the numerous capabilities of the EU and its
organizations (Telo 2016).
Lesson for the other economic:
The GFC promoted the differential economic growth pattern to the different
economies depending upon the level of indulgent of the respective economies with the
housing sector of the US. as the method of the mutual benefit and process to overcome the
process of ever deteriorating market situation, EU economies tried to depend upon the
regional economic integration, however, it can be seen that despite the rigorous attempt by
the several EU nations to depend upon the same, however, economic regionalism failed to
provide any way though the situation. As the way out through this, Asian countries proved to
be the lifeline to the EU countries. Since 2009, there has been dramatic change in the export
proposition form the EU nations to the Asian countries. As it can be seen that EU nations
started to export more amount of goods and services to the Asian regions allowing
themselves to earn more amount of trade balance which will inherently aid them to enhance
their financial condition. Thus, under the GFC like situation economic regionalism couldn’t
work as it was supposed to do.
Conclusion:
From the above discussion it can be seen that economic regionalism has provided
both good and bad to the European economy. With the rise in the Global Financial Crisis like
situation, there has been drastic fall in the trading prospect of the EU member nations that has

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given rise to the shifting from the regional economy to the international economy, however at
present while the economy is moving toward a stabilised situation, economic regionalism is
showcasing its power. During the GFC, all the western European nations was suffering from
the drastic failure of the market and it has paused the regional economic growth through
trading. as the outcome of the same, it can be seen from the above analysis, EU member
countries has shifted from the regional integrity to the Asian countries which were relatively
less impacted through the GFC and has lucrative market that can provide better trade scope to
the EU countries. At present, as the EU economy has been going through the growth state,
regional integrity id helping within the EU is helping all the states to get mutual benefit.

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