August 28, 2014
THE FINAL NAIL:
The euro has failed to boost trade between the countries that adopted it (Allister Heath, 27 Aug 2014, The Telegraph)
Posted by Orrin Judd at August 28, 2014 9:01 PMNobody today can argue that the past 15 years have been anything other than disastrous for the eurozone, but many ardent supporters still maintain that the single currency has been good for trade. It is hard to know what would have happened to imports and exports had the euro not replaced the franc, lira and mark, of course, but fresh research demonstrates that the eurozone is actually less integrated today than it was when the euro was launched.The note, produced by the Bruegel think-tank, is devastating. It measures integration on one simple metric: the share of exports from members of the eurozone and EU that go to other eurozone and EU countries, as derived from the IMF's Direction of Trade Statistics database. The figures have been adjusted for the changing membership of both those regions.During the 1980s, as Bruegel's researcher Giulio Mazzolini points out, EU countries' exports increasingly went to one another. Intra-EU exports rose by eight percentage points of the total to peak in the early 1990s at around 68pc of the total. The share then fell back to around 65pc before stagnating for a while and then returning to the 67-68pc level, where it remained until the end of the 2000s. It then collapsed and is now back to around 64pc, a level of integration last seen in the mid to late 1980s.As to the eurozone, which was launched on January 1, 1999, the results mirror those for the broader EU almost perfectly, suggesting, as Bruegel puts it, that "the common currency might not have had the expected effect on trade between euro area members". Intra-eurozone exports peaked at around 52pc of the total in the late 1990s and have been in decline ever since.