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EU & Competition

3.1 Introduction

The first chapter discussed the benefits of free competition, while the second discussed the link between globalization and free competition. This chapter will focus on how the EU both promotes and works against globalization and free competition. Particular emphasis will be placed on how the introduction of the euro has acted to reduce barriers to cross-border global competition as it is perhaps less apparent

3.2 How EU Has Limited Globalization

Unfortunately, the European Union has acted in many ways that has limited competition and globalization. The three main ways in which this has been done are through its regional policy, its farm policy and through its trade policy.

EU regional policy distorts free competition by subsidizing companies and/or governments and households in certain economically weak regions, such as much of Southern and Eastern Europe and certain parts of northern Sweden and Finland. This means that resources will not be allocated efficiently as companies operating in weak regions will receive an advantage compared to companies in other regions. This damages the EU economy as a whole and might for reasons explained not even benefit the subsidized regions.

Ireland is sometimes held to be a success story for EU regional policy. Supposedly the spending by EU there helped create the economic boom there. But that is not true. The reason why Ireland enjoyed such a boom was because the Irish government sharply reduced government spending, thereby helping to eliminate the budget deficit and also enabling it to lower taxes, particularly the corporate income tax. By contrast, other countries and regions that pursued more socialist


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