Economy of Europe: Encyclopedia II - Economy of Europe - Economic sectors

Economy of Europe - Economic sectors

Economy of Europe - Agriculture and fishing

Europe's agricultural sector is in general highly developed, especially in Western Europe. The process of making Eastern Europe's agriculture, which is recovering from forty years of communism, more efficient is well underway and is helped by the accession of Eastern European states to the EU. The agricultural sector in Europe is helped by the Common Agricultural Policy, which provides farmers with a minimal price for their products and subsidizes their exports, which increases competitiveness for their products. This policy is highly controversial as it hampers free trade worldwide (protectionism sparks protectionism from other countries and trade blocs: the concept of trade wars) and is violating the concept of fair trade. This means that because of the protectionist nature of the Common Agriculture Policy agricultural products from developing countries are rendered incompetitive in both Europe (an important export market for developing countries) and on their home markets (as European agricultural products are dumped on developing countries' markets with help from European agricultural subsidies). This controversy surrounds every system of agricultural subsidies (the United States' policy of subsidizing farmers is also controversial). The Common Agricultural Policy is also controversial because 40% of the EU's budget is spent on the Common Agricultural Policy and because of the overproduction caused by the Common Agricultural Policy.

The Common Fisheries Policy is surrounded by an extensive system of rules (mainly consisting of quotas) to protect the environment from overfishing. Despite of these rules the cod is becoming increasingly rare in the North Sea. Strict fishing rules are the main reason for Norway and Iceland to stay out of the European Union (and out of the Common Fisheries Policy). Price guarantees and subsidizing of fishermen is implemented in the same way as agricultural subsidies are.

Economy of Europe - Manufacturing

Europe has a thriving manufacturing sector, with a large part of the world's industrial production taking place in Europe. Most of the continent's industries are concentrated in Western Europe (mainly in the zone that comprises England, the Benelux, western Germany, northeastern France, Switzerland and northern Italy). However, because of the higher wage level and hence production costs Western Europe is suffering from deindustrialization and offshoring in the traditional (labour intensive) manufacturing sectors. This means that manufacturing has become less important in Western Europe and that jobs are moved to cheaper regions (mainly China and Eastern Europe).

Eastern Europe has been industrialized since the early to mid 20th century but suffered from contraction in the 1990s when the inefficient heavy industry based manufacturing sector crippled after the collapse of communism and the introduction of the market economy. In the 21st century the manufacuring sector in Eastern Europe picked up because of the accession of Eastern European states to the EU and resulting accession to the European Common Market. This caused Western European firms to move jobs from their manufacturing sector to Eastern Europe (see above), which sparked Eastern European industrial growth and employment.

Some of the world's largest manufacturers are European (BP, Royal Dutch Shell, DaimlerChrysler, Volkswagen)

Economy of Europe - Investing and banking

Europe has a well developed financial sector. Many European cities are financial centres with the City of London being the largest. The European financial sector is helped by the introduction of the euro as common currency. This has made it easier for European households and firms to invest in companies and deposit money on banks in other European countries as exchange rate fluctuations are now non-existent in the Eurozone. In Eastern Europe the financial sector is somewhat less developed (mostly because of the communist legacy), but is rapidly developing to Western European standards helped by economic growth in Eastern Europe and the commitment of Eastern European governments to achieve these high standards.

European banks are amongst the largest and most profitable in the world (Credit Agricole, HSBC, Royal Bank of Scotland, HBOS, BNP Paribas, Santander).

Adapted from the Wikipedia article "Economic sectors", under the G.N U Free Docmentation License. Please also see http://en.wikipedia.org/wiki