Over 37 years have passed since the European Community (EC) was created under the Treaty of Rome. During this period of time the economy of Europe has gone through alternating periods of growth and stagnation as well as trade liberalization and protectionism (Pelkmans and Winters, 1988). Today the European Union (EU) consists of 15 member states: Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Portugal, Spain, the United Kingdom Austria, Sweden and Finland. These economies, during the past 10 years, experienced relatively strong growth in the first half of the 1980s, when the Single Market program stimulated a surge in investment, and much slower growth during the 1990s.
The analysis which follows will first present some basic statistics on the Economic Union. It will then discuss the alternating periods of stagnation and growth over the past 10 years in Europe. Finally, it will focus more directly on the structural problem of unemployment. The problem was in existence prior to the formation of the Economic Union and continues to be of significant concern today.
The European Union of 15 member states has a population of about 370 million, concentrated largely in Germany (81.5 million, or 23%) Italy, the United Kingdom, and France (each with approximately 58 million people). While the population is about one and a half that of the Unite States, it is squeezed into an area about one-third of the size of the U.S. (Hoover, 1995)
The overall size of the EU economy in 1995, including the three new member states that joined the Union on January 1, 1995 was $7.1 trillion. Private consumption accounts for 63% of the EU's Gross Domestic Product, while gross fixed capital formation contributes 20.3 percent and government consumption adds an additional 17 percent (Hoover, 1995).
In terms of the distribution of economic activity, Germany has by far the largest economy, accounting for 29...