A single market

Question 1.

A single market is a type of trade bloc which is composed of a customs union with common policies or product regulation and freedom of movement (Lorinc 1990).

In a single market the people, goods, money and services are not restricted and can move freely from one place to another. This therefore means that the consumers will not have to change the networks every now and then to match their location.

In addition to the above, the single market will result in a huge potential market. Most consumers will be willing to use the services as they are standardized. The prices will also be low and therefore more people will be willing to use the telecommunication services. In order to serve all the consumers the service providers will have to employ more people to work for them. This will in turn improve the lives of most people and the economy of the European countries. There will also be a lot of competition. The service providers will have to improve their services which mean the consumers will get better services. The providers will have to be innovative which can lead to the discovery of better products and services. As a concluding remark, a single market should be encouraged since it benefits both the consumers and the telecommunication service provider.

Question 2.

European Monetary Union (EMU) is a framework for cooperation on economic policy of European countries. The member countries agree on common guidelines for questions of importance to the economy.  Member countries work together to protect savings, maintain a flow of affordable credit for businesses and households and put in place a better financial governance system worldwide.

For a country to join the EMU it has to meet the convergence criteria as well as the financial and economic liberalization criteria of accession. The convergence criteria according to Burkitt and Whyman(1999) entails the following: A country’s price stability, sustainable public finances, exchange rate stability and durable convergence are considered. In addition, the countries debts and deficits are considered in terms of the GDP (gross domestic product) as well as the government gross debt. If a country’s deficit is out of control it cannot become a member.

Another consideration is the interest rates. However, this is a bit difficult to measure since interest rates differ according to countries. For a country to join the European Union it has to use the Euro as its currency. To do this, its old currency has to have a stable exchange rate for two years.

A budget deficit occurs when a country such asGreecespends more money than it takes in. In such a case the debt level seems to be out of control. The businesses in such a country lack enough financial resources to pay their workforce. This results in unemployment and the productivity of the businesses in turn falls. The managers in such economies cannot compete effectively with their counterparts in the other countries and as a result the businesses may even end up closed. Due to the aforementioned problems the economies of the countries continue to deteriorate.

Question 3.

According to the European Union, companies with fewer than 10 employees are ”micro” those with fewer than 50 are ”small” and those with fewer than 250 are ”medium”. Large scale enterprises are basically those with more than 250 employees. The enterprises can also be differentiated according to their capital base. As their names suggest the large enterprises have more capital and own a lot of assets.

Small and Medium Enterprises (SMEs) play a significant role in the economic growth of an economy. According to Burda and Wyplosz (1995), the small and medium enterprises have to adapt in to the competitive environment. These businesses have been lagging behind due to the lack of enough capital and skilled labour force. However, nowadays most financial institutions are willing to provide capital to these enterprises and thus encouraging their growth. Despite the above positive points the SMEs face a few negative challenges as will be enumerated. The large scale enterprises like Carrefour and Wal-Mart have an added advantage in that they undertake e-commerce and as a result can sell to people all over the world. They also have a network of stores and of different types. For example the Carrefour has hypermarkets, supermarkets and therefore reach more consumers than the SMEs. In conclusion, it is strategic for the European Union single market to encourage the growth of all the enterprises. This is because each and every one of them contributes to the economy of the region.



Burkitt Band Whyman P 1999, ‘Convergence criteria and EMU membership: theory and evidence’, Journal of European Integration, Vol. 21, Issue 4, pp. 281-305.

Lorinc,HI1990,’maccroeconomics policy in the quasi-market economics’, Post-communist economies, Vol2, Issue 4, pp.459-480.

Michael Burda and Charles Wyplosz (1995) European Macroeconomics. 2nd ed, Ch.3.5.1, p.56 Oxford UniversityPress ISBN 0198774680.

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