Introduction II Knowledge Enrichment Lecture notes



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Study Sources R and S.

SOURCE R

The following is a table of Europe’s economic growth (in terms of average annual growth rate) from 1890-1993.




Period

Real GDP

Population

Real GDP

Per capita

Per hour

1890-1913

2.6

0.8

1.7

1.6

1913-50

1.4

0.5

1.0

1.9

1950-73

4.6

0.7

3.8

4.7

1973-93

2.0

0.3

1.7

2.7@


Notes: @ 1973-87
GDP and population are aggregates for 12 countries (Austria, Belgium, Denmark, Finland, France, Germany, Italy, Netherlands, Norway, Sweden, Switzerland, United Kingdom, all adjusted for boundary changes)
Sources: 1870-1989, Maddison, Dynamic forces; 1989-93, OECD, Economic outlook, as cited in N.F.R. Crafts, ‘The Golden Age of Economic Growth in western Europe, 1950-1973,’ The Economic History Review 48, no. 3 (1995), p.429.
SOURCE S

The following are two maps of the European Community and European Union circa 1986 and 1995 respectively.





1986
Source: “European Community – Wikipedia” http://commons.wikimedia.org/wiki/File:EC12-1986_European_Community_map_enlargement.svg

(Accessed on 12 March 2014).




1995
Source: “European Union – Wikipedia” http://commons.wikimedia.org/wiki/File:EU15-1995_European_Union_map_enlargement.svg

(Accessed on 14 March 2014).





  1. Refer to Source R. How did the European economy perform during the period 1950-73 when compared to other periods in the 20th century? Support your answer with relevant clues from Source R. (1+2 marks)




  1. (i) Describe the trend of European economic integration shown in Source S. (1 mark)

  1. How might the European economic performance you mentioned in part (a) be related to the trend you pointed out in part (b)(i)? Explain your answer with reference to Sources R and S. (4 marks).




  1. What are the usefulness and limitations of Source S in reflecting the process of the European economic integration up to the end of the 20th century? Explain your answer with reference to Source S and using your own knowledge. (5 marks)


Question 11

Suggested answers and reference for assessment


(a)

Performance of European economy during the period 1950-73

[1+2 marks]




European economic performance:

  • The growth of Real GDP during 1950-73 exceeded that of other periods, signifying a much quicker economic expansion.


Clues, e.g.:

  • The Real GDP of 1950-73 increased by 4.6% per year on average, which was much higher than the 2.6% attained by the previous peak of development (1890-1913).

  • The Real GDP per capita of 1950-73 increased by 3.8% per year on average, which was also much higher than the 1.7 in the periods before and after the peak of 1950-73.

[1 mark]


[2 marks]










(b) (i)

Trend of European economic integration

[1 mark]




Trend:

  • The European Union admitted more member states, e.g. Spain, Portugal, Austria and Norway, in 1995. European countries became more integrated and united.

[1 mark]










(ii)

How the European economic performance might be related to the trend of European economic integration

[4 marks]




L1 Obscure or no attempt at drawing cause-and-effect relationship between the performance and the trend, and focusing on either one Source

L2 Clear explanation of cause-and-effect relationship between the two, and covering both Sources

Relationship between the performance and the trend:



  • The performance (part (a)) was the cause, and the trend (part (b)(i)) was the effect.

  • (Source R) The rapid annual growth of Real GDP in western European countries demonstrated the benefits of economic integration among some western European countries. Thus, other countries started to contemplate joining the European Community.

  • (Source S) Attempting to model on how some western European countries benefitted from economic cooperation, countries like Spain, Portugal, Austria, Sweden and Finland joined the European Community/Union during the 1980s and 1990s.


[max. 2]
[max. 4]










(c)

Usefulness and limitations of Sources S in reflecting the process of European economic integration until the end of the 20th century

[5 marks]




L1 Lopsided answer focusing on either usefulness or limitations

L2 Comprehensive answer covering both usefulness and limitations
Usefulness, e.g.:

  • (Source R) Post-WWII economic cooperation in western Europe caused obviously faster growth of Real GDP among these countries.

  • (Source S) In the 1980s and 1990s, countries like Spain, Portugal, Austria, Sweden and Finland joined the Inner Six and Britain who had formed the European Community earlier on.


Limitations, e.g.:

The Sources fail to show the following episodes in the course of European economic integration:



  • The start of the economic integration in the 1940s, i.e. Benelux, ECSC and EEC;

  • The prolonged skepticism of France towards Britain and the issue of British membership until the early 1970s;

  • The transformation of the European Community to the European Union; and

  • The applications of former communist countries in eastern Europe after 1991 and the issue of their suitability for membership in the EU.




  1. Study Sources T and U.

SOURCE T

The following extract is found from an official document issued by the Commission of the European Communities on 31 May 1995.




The increasingly closer integration of the European economies calls for greater monetary coordination, against a background marked by the disappearance of fixed exchange rate regimes and the globalization of the world economy.
Only the single currency and its environment of stability will provide the citizens of Europe with the many practical advantages listed below:

  • a more efficient single market, once the single currency is in place;

  • the stimulation of growth and employment;

  • elimination of the additional costs connected with the existence of several European currencies;

  • an increase in international stability;

  • enhanced joint monetary sovereignty for the Member States.

Source: Green Paper: On the Practical Arrangements for the Introduction of the Single Currency (Luxembourg: Office for Publications of the European Communities, Lanham, Md.: UNIPUB, 1995), p.10.
SOURCE U

The following is extracted from an article on effects of the euro published in January 1999.



With the euro in existence, trade among the 11 countries will not require the purchase or sale of foreign exchange nor will contracts for transactions among the countries be subject to uncertainties regarding future exchange rates. Furthermore, with prices quoted in the same currency (the euro) in all 11 countries, firms in euroland are more likely to trade with one another and consumers are more likely to purchase products made in other euroland countries.

In those circumstances, trade among the 11 countries will probably increase in relation to their trade with the rest of the world. Both imports from and exports to non-EMU countries would increase less rapidly than in the past.



Source: “International Effects of the Euro (by Robert Solomon in January 1999) – The Brookings Institution website” (http://www.brookings.edu/research/papers/1999/01/01globaleconomics-solomon) (Accessed on 17 January 2014).


  1. Refer to Source T. Identify three benefits that may result from the imposition of the single currency in Europe. (3 marks)




  1. Refer to Source U. What is the author’s view about the development of the Euro as the common currency of 11 European countries? Explain your answer with reference to Source U. (4 marks)




  1. What are the usefulness and limitations of Sources T and U in reflecting the development of economic integration in Europe during the 1990s? Explain your answer with reference to Sources T and U and using your own knowledge. (7 marks)



Question 12

Suggested answers and reference for assessment


(a)

Three benefits resulting from imposition of single currency in Europe

[3 marks]




L1 Quoting directly from the Source without paraphrasing

L2 Explaining from the Source in one’s own words
Benefits (any three), e.g.:

  • Smoother functioning of the single market;

  • Faster economic growth and raising employment rate;

  • Reducing costs incurred in the exchange of European currencies;

  • Guaranteeing international stability; and

  • Member states sharing sovereignty over the new single currency.

[max. 2]

[max. 3]










(b)

Author’s view about development of Euro

[4 marks]




L1 General answer focusing merely on the Source

L2 Well-explained answer covering both the Source and own knowledge
View:

  • The use of Euro would be beneficial to trade within the Euro zone.

  • Clues, e.g.:

    • “…nor will contracts for transactions among the countries be subject to uncertainties regarding future exchange rates”

    • “firms in euroland are more likely to trade with one another”

    • “consumers are more likely to purchase products made in other euroland countries”



Own knowledge:

  • Original national currencies of Euroland countries are pegged at fixed rates to the new Euro, thus also fixing the exchange rates between national currencies.

  • The adoption of Euro as an account clearing unit (from 1999 to 2002) served to stabilize the cost of transactions, profits and losses in businesses. Although national currencies continued to exist for the time being, trade among Euroland countries were hopefully safeguarded from uncertainties.

[max. 2]

[max. 4]










(c)

Usefulness and limitations of Sources T and U in reflecting the development of economic integration in Europe during the 1990s

[7 marks]




L1 Lopsided answer focusing on either usefulness or limitations

L2 Comprehensive answer covering both usefulness and limitations
Usefulness, e.g.:

  • (Sources T and U) the introduction of Euro as single common currency among Euroland countries as part of economic integration

  • (Source U) the subsequent reduction of trade uncertainties and anticipated increase in trade among euroland countries


Limitations, e.g.:

Sources T and U do not reflect the following:



  • The process of transformation from European Community to European Union (together with its structural and operational changes)

  • The geographical coverage of economic integration in the EU, i.e. which countries were / were not included in the Euro zone

  • Various controversies and obstacles to the adoption of Euro as single currency

[max. 4]

[max. 7]




  1. Study Source V.

SOURCE V

After the fall of the Berlin Wall in 1989, the following text was published as part of a book issued in 1992.




Whether the EC [European Community] and other west European institutions have grown strongly enough to stand together and help the eastern European countries to gradually close the gap and join with the prosperous half of western Europe. Or, whether the gap has indeed become unbridgeable in which case one should not rule out an alternative nightmarish scenario whereby western Europe becomes ‘East Europeanized,’ ‘Third Worldized’ or simply thrown back to its heroic of barbaric past, complete with new religions and new wars, new prophets and new Caesars.’

Source: P. Tsakaloyannis, ‘Risks and Opportunities in East and South’ in A. Pijpers, ed., The European Community at the Crossroads (Dordrecht: M. Nijhoff, 1992), p.186.



  1. Identify a major duty of the European Community in the 1990s, as shown in Source V. Cite one clue from Source V to support your answer. (1+1 mark)




  1. Did the author firmly believe that the European Community could perform the duty you mentioned in part (a)? Explain your answer with reference to Source V and using your own knowledge. (4 marks)




  1. Did Europe during the period 1991-2000 become more similar to the former western Europe or eastern Europe? Explain your answer with reference to Source V and using your own knowledge. (7 marks)


Question 13

Suggested answers and reference for assessment


(a)

A major duty of the European Community in the 1990s

[1+1 mark]




Major duty of the EC:


Clue:

  • “help the eastern European countries to gradually close the gap and join with the prosperous half of western Europe”



[1 mark]


[1 mark]









(b)

Whether the author firmly believed that the EC could perform its duty mentioned in part (a)

[4 marks]




L1 Merely elaborating the Source without identifying author’s stance

L2 Able to identify author’s stance and elaborating the hidden meaning of the source
Whether the author firmly believed the EC could perform its duty:

  • No.

  • Clues, e.g.:

    • The Source is written in “whether … or …” style, implying that there were two possibilities (both optimistic and pessimistic), instead of a purely optimistic one, in the ongoing development of the EC.

    • The title of the complete text is “Risks and Opportunities in East and South” which implies that the prospect of the EC may be filled with risks apart from achievements.


Own knowledge:

  • 1992 was still the fresh beginning stage of the post-Cold War era, during which the relatively poorer eastern European states were still trying to integrate themselves into the relatively more prosperous economic system of western Europe. There were still a lot of uncertainties and no positive development can be taken for granted.

[max. 2]
[max. 4]










(c)

Whether Europe during the period 1991-2000 became more similar to the former western Europe or eastern Europe

[7 marks]




L1 Rough answer attempting merely to discuss the general development of the 1990s

L2 Lopsided answer focusing merely on either side of the comparison

L3 Comprehensive answer showing a balanced comparison between the two sides
More similar to western Europe than eastern Europe:

  • (Source V) “join with the prosperous half of western Europe” – Some eastern European countries (e.g. Czechoslovakia, Poland) really became more industrialized and took up greater roles in the European industrial development. Their wealth level and living standard also became nearer to those of western Europe.

  • (own knowledge) In general, after 1991, the former eastern European countries abandoned their communist economic models and followed the economic system of the capitalist West, such as the market economy system. None of them retained the communist system of command economy.


More similar to eastern Europe than western Europe:

  • (Source V) “western Europe becomes ‘East Europeanized’, ‘Third Worldized’, …” – After 1991, some western European countries became outcompeted by the more competitive, former eastern European countries. Their status of First World capitalist countries was marginalized by some former eastern European states.

  • (Own knowledge) The above situation took place when western European countries such as Spain, Portugal and Greece experienced severe competition in industry and trade from former eastern European countries such as Poland and Czechoslovakia. Their ability to sustain an effective economic system and maintain healthy national finance has been subject to open doubt during the 1990s.

[max. 2]
[max. 4]
[max. 7]



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