Key Economic and Social Concepts in the European Union
Globalization
Globalization is the process of building a single economic space on a planetary scale, where the production and circulation of goods and services are governed by the laws of the so-called ‘market economy’ or simply capitalism. Its expansion is based on new technologies that multiply the capacity to generate and transmit information, enabling companies to operate synchronously and in real-time, encouraging financial concentration. At the same time, it expands the areas of production and market, establishing, therefore, a dense network of flows that connect businesses and territories. The importance of the distance factor is reduced, and the myth is born that the world becomes a global village. Critics of the system consider that with globalization, the traditional social and territorial imbalances remain, or even increase, while new ones emerge.
Human Development Index
The Human Development Index (HDI) is a statistical indicator prepared by the United Nations Development Programme (UNDP) to measure, for each country, the adult literacy rate, life expectancy at birth, and GDP per capita or income per capita, in dollars [i.e., the monetary value of the total current production of goods and services]. Currently, Norway tops the list, and Zimbabwe appears at the bottom. Spain is, with 0.863 points, among the ‘very rich’ countries, specifically at number 20 on the 2010 table.
Welfare State
The Welfare State is a social policy in Europe, with significant differences between the North and South of the European Union, consisting of a set of measures and actions by which governments were responsible for an increasing number of services and benefits (health, education, environment, promotion of housing, unemployment insurance, etc.) with the aim of providing all citizens with decent living conditions to ensure their welfare. The so-called “Welfare State,” inspired by social democracy, is threatened by neoliberal policies.
Cohesion Fund
The Cohesion Fund was established by the Maastricht Treaty to reduce disparities between national economies and facilitate the convergence of the least developed of the European Union. Member States where GDP per capita was less than 90% of the EU average in 1992 [when signing the Treaty] and that have a program aimed at meeting the conditions of convergence may benefit from the Cohesion Fund. States such as Greece, Spain, Ireland, and Portugal are in such a situation. It focuses on projects related to the environment and transport infrastructure, telecommunications, and energy.
Structural Funds
Structural Funds are a group of aids aimed at reducing disparities between regions of the European Union. They are allocated to the regions that meet objectives 1, 2, and 3.
- Objective 1 is to promote development through the creation of basic infrastructure in those regions where the average GDP per capita is less than 75% of the European Union average. This objective also includes the outermost regions (French overseas departments [Guadeloupe, Martinique, Guyana, etc.], Azores, Madeira, and the Canary Islands).
- Objective 2 is the socio-economic restructuring of agricultural areas, fisheries, and industrial or urban crisis areas.
- Objective 3 is to promote human resources through the adaptation and modernization of policies and education systems, training, and employment.
The main EU structural funds are the ERDF, EAGGF, and ESF.
European Regional Development Fund (ERDF)
The European Regional Development Fund (ERDF) is a European Structural Fund that aims to correct major regional imbalances that exist within the European Union, mainly stemming from agriculture, industrial change, and structural unemployment. It encourages infrastructure (health, education, transport, and energy) and endogenous development through productive investments.
European Agricultural Guidance and Guarantee Fund (EAGGF)
The European Agricultural Guidance and Guarantee Fund (EAGGF) promotes the structural adjustment of farmers to new forms of agriculture and the development of new economic sectors in rural areas.
European Social Fund (ESF)
The European Social Fund (ESF) is one of the structural funds of the European Union, aiming at the promotion of vocational training and employment. Therefore, it works to fulfill Objective 3: to promote human resources in the backward regions.
Outermost Regions
Following its integration into Europe, the Canary Islands have become part of the outermost regions (ORs) of the European Union and are integrated into the EU regional policy. The Canary Islands are part of the ORs, along with other European territories, such as the Azores [Portugal], Madeira [Portugal], Guadeloupe [France], French Guiana [France], Martinique [France], and Reunion [France]. These developing regions are characterized by common disadvantages: they are far from Europe, have a low level of development, are small in size and fragmented into islands, and have a strong economic dependence on a limited group of products [e.g., the Canary Islands depend heavily on tourism]. This situation creates problems of market and production, which is more expensive and cannot reach the minimum dimensions for efficiency. The European Union considers these problems as permanent, regardless of the income level of these spaces, and has taken specific actions to solve them, such as special economic measures and creating a specific fund for help.
Maastricht Treaty
The Maastricht Treaty, signed in 1992, came into force in 1993. The European Community became the European Union and set a timetable for economic and monetary union, foreign and security policy, and cooperation in justice and home affairs. The signatory countries are: the six founders plus Denmark, Ireland, and the United Kingdom, which joined in 1973; Greece, in 1981; Spain and Portugal, in 1986; and Germany, reunified in 1991.