In 1993, 27 European countries came together to form a union that was aimed at increasing trade between them. The signing of the various treaties necessary for cooperation of these countries saw the birth of one of the biggest economic powerhouses. The fact that the union has a great organization and a parliament that controls its operation has seen it having a great impact on the global economy.
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The same has been duplicated in the political arena as the union has one of best-controlled economies in the world. The union has also controlled the commercial activities of these countries, and it is a big contributor to the commercial activities in the world. However, in the recent years the going for this union has not been in its best of the forms (Kahn 2008).
Global economic crises have had a great influence at it and have caused some of the members to join hands to form other unions in an aim of fighting the arising crises. The resultant of this is the formation of two unions, the G20 and the G2, both with an aim of fighting the global crises.
The aim of this essay is to try to find out whether the formation of these unions poses a threat on European Union. Arguments in the essay will be aimed at deriving a wide range of information of the effects the new unions has on the global economy, as well as European Union.
Facts about the activities of these unions will be revealed and the effect they have on the European Union will also be accessed. A conclusive conclusion will be arrived at that seeks to show whether the European Union is facing any threats from the new emerging unions.
The G20 union is an organization of 19 countries and 1 union with an aim of bringing together the industrialized countries with the emerging markets. Dialogue is a valued asset of this organization as it bids to solve the problem of global economic crises. On the other hand, G2 is an informal association between two countries that is United States and china to promote a bilateral relationship between them (Dizikes 2009).
To start with, the global financial crisis that has been experienced in the recent years is a globalized affair. By this, I mean that it needs a combination of different countries of the world to solve it, and the G20 and G2 offer this solution as they incorporate members from different regions of the world.
Members range from Asia, America, Europe, Africa, and even Australia. Since not all economies of the world were involved in the decline of the economies, incorporating all of them means that the countries can share the resources left out by the crisis.
On the other hand, the European Union is a combination of countries in Europe, the lack of diversity with other countries of the work means that very little can be shared globally since all the countries have almost identical economies (El-Agraa 2007). The resultant of this is that the accomplishments by the G20 and the G2 are more than the ones brought by the European Union. In other words, the threat from the new emerging unions is great to the European Union.
Taking an example of G20, they have incorporated an association of industrial powers and emerging markets, and they encourage dialogue between the member states. Through this, the problem that existed of emerging markets failure to be included in the global economy discussion was solved.
In addition, the global international architecture has been strengthened, as well as growth and development around the globe. The various meetings held between the members have shown a great improvement in the globe, especially when it comes to the emerging markets.
The results from this association are tremendous, as the member countries have control of about 90% of the world’s global national product, as well as 80% of the world’s trading activities. Also, notable is the fact that about sixty six percent of the world population is involved in this association. The influence and the legitimacy of the G20 can be attributed to the broad representation as well as the economic weight it carries.
The influence it has on the world is undeniably the biggest ever. Clearly, the heights reached by the G20 union is one to reckon with, the transformation of the global economy and financial systems is the highest to be attained in the recent years. This is surely a scare to existing unions since none of them has enjoyed such. The threats to this union is therefore there and one of biggest around (Tindall 2009).
Another reason that the European Union should feel threatened by the new unions especially the G20 is the changes these unions have caused to the global economy. Financial regulations have increased in scope, as well as the strengthening of prudential regulations.
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Policy coordination has also been enhanced through the creation of a framework aimed at ensuring that there is macro-economic cooperation between the members of the union (Baldwin 2009). Finally, the influence of the G20 union also has the eyes of international monetary fund (IMF) and the World Bank, and they have reformed towards improving global governance and putting to account the needs of the emerging developing countries.
The truth of the matter is the world has encountered many changes that have transformed it to a global economy, therefore, this is enough proof that the regional economic blocks are being overtook by this development and they risk losing their place to more globalized unions (Armijo 2002). Again, this should put a scare on the European Union, which is a regional economic block only operating in Europe.
The scope covered by the new unions also poses a risk to the European Union. The meaning of this is that the unions have taken an initiative far beyond the economic strengthening, and have taken social responsibility. A good example is G2 association between United States and China. Beyond their economic relations, they have established a mechanism to fight against global pollution. China and United States are the biggest polluters of the environment due to emitting from the production companies.
The bilateral relationship is aimed at the worldwide good where we have the world being saved from such problems as global warming. Through such measures like speedy research, both these countries have expounded their relationship beyond the normal economic level. The cooperation has seen this knowledge or implementation of the same extended to most parts of the world to ensure that the global environment has been kept safe for each and every one living in it.
The other beneficially to this cooperation is other Asian societies who have enjoyed photovoltaic cells, which have been produced through solar and wind power by china. However, the G2 union cannot just be seen as a replacement of the G20 union, but rather a facilitator to this union, especially in the economic terms (Klau 2008).
The European Union has its part, which it has contributed in fighting the climatic changes due to pollution of the environment. However, the scope it covers is allowed in Europe. This is where there is the need to incorporate a more globalized system of solving the problem since climate change does not know geographical boundaries.
Unification ensures the good of all, and is one important aspect in ensuring the success of an organized institution. The fact that most of the policies are set out by the individual countries rather than the European Union also creates partial division. Usage of such ways on policing is like have a constitution and another body that has laws that has powers over it.
There is a need to develop policies that are agreed upon by all the members or even a greater majority like what is happening in the new unions being formed. Having policies that are agreed upon ensures that there are less number of people who fail to follow them as they are universally binding.
Lack of unifying policies also means lesser interaction, especially when it comes to technology as experience by the countries that are not in the golden triangle (English 2005). No wonder growth is being experienced more in this area. The creation of unions like the G20 ensures that promotion of growth is all around the world with views of the member states inclusive irrespective of their economic capability.
In any market, there needs to be a seller and subsequently an able buyer. The two emerging unions offer this description in their operation, that is, the industrial able nations are cooperating with the emerging markets of countries that are not so developed in a healthy cohesive relation.
The example of the G2 has the same, as it sees a relationship between the world’s biggest debtor combining together with the world’s biggest creditor. Much can be achieved when such an organization is there unlike when an association of countries is towards the betterment of each other’s lives and promotion of employment.
Common interests are able to be arrived at through such cooperation, for example, the action of Washington backing of on the issue of human rights. Shifting the focus on the European union, their relationship is what can be termed as “promoting fairness and caring society” as it is not as strong, since there exists a common market, and the market is endowed with almost uniform products (Goldfarb 2009).
The inability to handle the competition is also another reason behind the European Union facing the threat of controlling the global economy. According to (Kahn) 2008, the European Union was unaware of the threat of new economies emerging, especially in India and China and was still falling behind United States’ economy. The fact that European Union is unable to handle the high competition discredits them of the control they have in the world economy.
The reasoning behind this, to be in control of any market or economy is because it is important to that competitive edge, to ensure that you do not lose to the other firms. If this is put in practice in this scenario, and the market being the global economy, the European Union would surely lose. The fact that they do not even know of the emerging powers is also a minus to their control of the global market (Garrett 2009).
Finally, the inclusion of the European Union to one of these bodies is also an indicator of the threat that the European is facing from the rise of the new unions. In G20, there are 19 countries and European Union makes the twentieth member of the union. It is always true that when you cannot fight them, the usual solution is usually to join them.
The action by the European Union to join the G20 signifies the same and brings the focus of the strength and the much success that can be achieved when countries of all regions of the world can come together. Though European Union is a strong economic house, it needs other economies outside its scope in its bid to increase its economic influence (Archer 2008).
To sum up, we cannot overlook the impact that European Union has had in the global economy, as much has been achieved. Among them has been the creation of a common currency, which has solved the problem of currency barrier as well as betterment of so many people’s lives through the provision of health services, and also fighting of unemployment. However, the problem of the scope has discredited the union. The fact that much of its focus is in Europe is a problem since technology has transpired the economy to be a global one.
That is why the union’s competitive edge has been on the downfall, and more globalized oriented unions are offering such a competition that is not able to handle. Diversity always has an upper hand when it is in competition with other competitors who have not embraced it. A “buyer-seller” relationship is also of importance in ensuring that the relations are beneficial economically. The meaning of this is that there needs to be people who are providing and those who are provided for economically.
The G20 and G2 had this in mind, and that is why they are reaping many benefits out of their associations (Jørgensen 2008). The inclusion of the European Union also is beneficial since the benefits of the G20 union will increase from the benefits accrued from the organization. Therefore, it is clear that the threats offered by both G20 and G2 are too great to be ignored, and that these two unions are in control of the world economy.List of
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