 | Economy of Europe: Encyclopedia II - Economy of Europe - Economic development
Economy of Europe - Economic development
Economic history of Europe
Economy of Europe - Pre-1945
Prior to World War II, Europe's major financial and industrial states were the United Kingdom, France and Germany. The Industrial Revolution, which began in England, had spread rapidly across Europe, and before long the entire continent was at a high level of industry. World War I had briefly led to the industries of some European states stalling, but in the run-up to WW2 Europe had recovered well, and was competing with the ever increasing economic might of the United States of America.
However, WW2 caused the destruction of most of Europe's industrial centres, and much of the continent's infrastructure was laid to waste.
Economy of Europe - 1945-1990
Following World War II, Europe's economy and infrastructure was in tatters. The vast majority of Eastern European states came under the control of the USSR, and therefore a communist market-system (Yugoslavia also adopted this type of market-system but it was not under control of the USSR). Those states that retained free-markets were given vast amounts of aid by the USA in order to help rebuild their state of economy.
Many Western European governments moved to link their economies, laying the foundation for what would become the European Union. This meant a huge increase in shared infrastructure and cross-border trade. Whilst these Western European states rapidly improved their economies, by the 1980s, the economy of the USSR was struggling, mainly due to the massive cost of the Cold War. The GDP and living standard of Eastern European states were also behind those of their Western neighbours. Even free-market Greece, situated in South-Eastern Europe, struggled due to geographical isolation from Western Europe.
The European Community grew from 6 original members following WW2, to 12 in this period. The emphasis placed upon resurrecting West Germany's economy led to it overtaking the UK as Europe's largest economy.
Economy of Europe - 1991-2003
When communism collapsed in Eastern Europe and the USSR around 1991, these states struggled to adapt to free-market systems. There was, however, a huge variation in degrees of success, with Central European states such as Hungary, Slovenia, Romania and Poland adapting reasonably quickly, whilst post-Soviet states such as Belarus and Ukraine struggled to reform their crumbling infrastructures.
Western Europe was quick to develop economic ties with the newly democratic East. While the former USSR states dealt with change, Yugoslavia descended into civil war.
Europe's largest economy, Germany, struggled upon unification in 1991 with former communist East Germany. The Russian controlled Eastern part of the country had had much of its industrial infrastructure removed during the cold war, and for many years the West struggled to build the East up to an equal level.
Peace did not come to Yugoslavia for a decade, and by 2003, there were still many NATO and EU peacekeeping troops present in Bosnia-Herzegovina, Macedonia, and Kosovo. War severely hampered economic growth, with only Slovenia making any real progress in the 1990s.
The economy of Europe was by this time dominated by the EU, a huge economic and political organization with 15 of Europe's states as full members. EU membership was seen as something to aspire to, and the EU gave significant support and aid to those Central and Eastern European states wishing to work towards achieving economies so as to pass the entry criteria. Most of the better developed EU countries are part of the Eurozone, a currency union launched in 1999, whereby each member uses a shared currency, the Euro, which replaced their former national currencies.
Economy of Europe - 2004
In early 2004, 10 mostly former communist states joined the EU in its biggest ever expansion, enlarging the union to 25 members, with another eight making associated trade agreements.
Most European economies are in very good shape, and the continental economy reflects this. Conflict and unrest in some of the former Yugoslavia states and in the Caucasus states are hampering economic growth in those states, however.
Economy of Europe - Future
In 2005 the Russian dominated Commonwealth of Independent States (CIS) intends to create a rival trade bloc to the EU, open to any previous USSR state, (including both the European and Asian states). 12 of the 15 have signed up, with the three Baltic states deciding to align themselves with the EU.
Serbia & Montenegro are to hold a referendum in 2006 on whether to retain their union or become independent states. A decision on the future of Kosovo is expected by this time.
Romania and Bulgaria are acceding to the EU and will join in January 1, 2007. Croatia hopes to join and formal negotations are to begin in 2006, although a recent crisis surrounding General Gotovina means that Croatia is unlikely to join in 2007. Turkey, Ukraine and the remaining former Yugoslavian states hope to join sometime before 2015.
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 Adapted from the Wikipedia article "Economic development", under the G.N U Free Docmentation License. Please also see http://en.wikipedia.org/wiki |
