The advantages and challenges of European integration for business in the 21st century


With Europe being the epicentre of the two Great Wars of the last century, a robust arrangement of cooperation and mutual benefit was made imperative.  With the collapse of the Berlin Wall, an opportunity was created for the erstwhile divided Europe to once again unite under a democratic framework.  On the broader geo-political scale, the rise of the United States of America as the undisputed superpower had made a case for a suitable counterbalance.  The greater integration within Europe, as witnessed in the last two decades is an attempt toward this end.

European integration as it exists today is largely confined to the domain of economics.  In other words, the dismantling of labour movement barriers between nations, the floating of a common currency, the adoption of common laws pertaining to trade and commerce, are all outside the purview of domestic/internal policy.  To this extent, the constituent nations retain their cultural and social uniqueness, while still benefiting from new economic opportunities created within Europe.  This essay will look into the advantages and challenges created by the process of integration by way of studying its various facets.

The origins of European Integration:

Given the long history of war and conflict between European nations, there emerged a need for strong commitment toward cooperation and mutual benefit.  The first step toward this cooperative framework was initiated with the formation of Council of Europe and the European Convention for the Protection of Human Rights and Fundamental Freedoms in the year 1950.  An impressive 40 European nations subscribed to the resolutions carried forward in the convention.  Yet, the Council of Europe remained a peripheral institution as the continent was divided in two during the Cold War.  It would be another forty years for the next significant step toward integration, which came with the fall of Berlin Wall in 1989 and with it the collapse of the Soviet Union.  The commitment toward amicable relations within Europe resumed with the signing of Maastricht Treaty in 1993, which was further expanded in the Charter of Fundamental Rights in the year 2000.  The Charter drew together “all EU-protected personal, civil, political, economic, and social rights into a single text. But it goes beyond simply restating already respected human rights by addressing specifically modern issues such as bio-ethics and protecting personal information and data”. (Nagel, 2004)

An important aspect of the integration is the common acceptance of EU law by all constituent members.  With it they agree to abide by the judgments of the European Court of Justice, which will be the highest authority in resolving legal disputes.  The core principles of EU law were built on the common European traditions of law and justice.  As a way of making this new institution effective, all member nations have agreed that “EU law overrides national law in areas where the EU has authority and that the European Court of Justice is the final arbiter of EU law. Its complete judicial independence makes it one of the best examples of European integration”. (Rucker, 2004)

Advantages created by European Integration:

1. Free Market Economy:

At the centre of the European Integration is the acceptance of principles of free market economy by national governments.  Hence, it is only on expected lines that different member states have embraced the free market ideology at varying degrees.  The smaller nations of the EU have benefitted the most from the removal of barriers to trade and labour.  The Single European Act and the Maastricht Treaty are the key legislations pertaining to this integration of erstwhile separate national economies.  These laws endeavour to decrease, if not eliminate, “national differences in fundamental policies that are viewed as common interest to the Union although there are vast differences in the social and economic structures of the members” (Favell, 2001).  The application of principles of market economy across the EU has transformed the economic landscape of the entire region.  A healthy state of competition exists between nations and their leading enterprises, which helps generate economic growth, boost trade, encourage investment and lift the standard of living for all European Union citizens.  A classic example is the deregulation in telecommunications and air transport sectors and privatization of state-owned enterprises across the EU, which has levelled the playing field and has encouraged competition while also having positive economic implications for the citizens.

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