The impact of the introduction of the Euro on firms' expectations

Firms' expectations regarding their ability to enter new markets and to develop new products, and concerning the foreign competition they will face in future, are strongly affected by the introduction of the euro. The following article analyzes these expectations using panel data taken from a quarterly business survey in the service sector. Helpful comments from our colleagues Friedrich Heinemann, Georg Licht and Herbert S. Buscher on earlier drafts of this paper are gratefully acknowledged. We are also indebted to Enrico Steeb and Rolf Kempkes for their helping hand in setting up the data set and to Christina Kaiser for research assistence. We also wish to thank Semka Thorvaldsen for proof-reading.     

The Socio-Political Dimensions of the Currency: Implications for the Transition to the Euro

In the first section of this paper, the author demonstrates the crucial significance of anchoring symbolically a currency in the representation of a social whole, not least when practical and technical problems bound up with the creation of a new unit of account and the associated means of payment have to be addressed. In the second section of the paper, on the basis of this analysis, a number of practical implications for the transition to the euro are drawn. The analysis starts with the irreducible political and social dimensions of money related to its traditional public functions. The differentiation of modern societies gives to national currencies a regulatory role in insuring the social bond, as the same currency must be accepted in the public economy as well as in the private one. A series of conditions of legitimacy and confidence in the currency can then be drawn from its participation in the social regulation. To achieve legitimacy, every currency must on the one hand be an instrument that can provide the necessary credit for the development of production and trade and allow people to pay their debts to the public authorities, but it must also serve as a symbol of political belonging to a community. This last dimension of the currency is very often overlooked precisely because it is taken for granted. It is these political and symbolic dimensions of money which the transition to the euro now puts squarely on the centre stage.     

Business innovations from emerging market countries into developed countries: Implications for multinationals from developed countries

This article addresses innovation and emerging‐market countries. Both are important topics in the business world today. The focus of this article is on the importance of innovation and market development in emerging‐market countries by Western multinational companies typically based in North America and Western Europe. The authors of this article argue that as Western multinationals innovate and develop emerging markets, this will give multinationals the opportunity not only to compete effectively in emerging markets but also to protect their home markets in developed countries. Implications for Western multinationals are discussed. © 2012 Wiley Periodicals, Inc.     

Minimal Conditions for the Survival of the Euro

Most technocrats argue that creating the euro was a way of forcing the pace of political integration, since monetary union is not possible without political union. We disagree and instead put forward four minimal conditions for the survival of the euro. Political integration in Europe has its limits; the trick is to understand when less is more.     

Domesticating the Euro

Intereconomics - „We find the litmus test is whether governments gain access to a safe source of funding in a ‘domestic’ currency. Of the list of solutions considered, both Purple...     

Challenges of the Euro

Intereconomics - „The lesson from previous episodes of trade reform is in part a story of political framing as well as a story of compensatory deals. Countries can calculate that they might...     

Industrial buyers' expectations of supplier-attributes across developing countries: Implications for marketing strategies

This paper presents a cross-country comparative study of industrial buyers' expectations of supplier attributes which manifest in the process of supplier selection. The results indicate a variance in these expectations across the countries, implying a multinational rather than a global approach in marketing industrial goods beyond domestic borders. The possible role of cultural factors in the formation of these divergent expectations is suggested. The implications of the findings for developing appropriate marketing strategies, and for future research, are discussed.     

Preparations for the Euro by U.K. SMEs with Trading Links with the Euro Currency Area

This paper examines euro preparations by U.K. SMEs with trading links with the euro currency area. It suggests, notwithstanding the U.K.'s decision not to join the euro in the first wave, that SMEs with euro area trade links are particularly likely to have had to make some adjustments for the introduction of the euro. The paper assesses this level of preparation and seeks to understand if it is contingent upon the characteristics of the business, its geographic location, its business orientation and the type of trade link (e.g. importer/exporter). The paper finds, contrary to previous research, that business characteristics, geographic location and business orientation are, on the whole, of limited value in explaining euro preparation. What, instead, seems more significant is the type of link with the euro area: importers, exporters and those with subsidiary businesses in the euro area appear more likely to have made preparations for the euro than U.K. SMEs that are part of a euro supply-chain or are a subsidiary of a euro area business.     

The Euro at 20: A New Deal to Save the Euro

Intereconomics - “In its present set-up, the EMU could be expected to follow its historical predecessor, the Latin Monetary Union, which was founded in 1865 and in effect ended in 1914. Then...     

A new exchange rate mechanism for the Euro age

Only a limited number of countries will participate in the single currency area at its formation on January 1st, 1999. A new link between the currencies participating in the Euro zone and those unable or unwilling to do so must therefore be created. A new EMS, with the Euro as its anchor currency, must be installed to ease the path into EMU for those countries that wish to join at a later date.     

Living with the Euro: the consequences for world business

This paper evaluates the impact Economic and Monetary Union (EMU) will have upon world business. The impact upon the European business environment includes potential benefits of a low inflation, low interest rate zone, contrasted with problems of incomplete prior convergence and a deflationary bias at the heart of the EMU model. ‘Micro’ consequences include intensified competitive pressures, completion of the single market and industrial restructuring, tensions in labour relations between supra-national corporatism and decentralised flexibilisation, the impact of Foreign Direct Investment (FDI), together with estimated cost of transition. The paper concludes by warning businesses that inaction increases vulnerability, whilst preparedness maximises potential gains.     

The arrival of the Euro and its implications for Asia

The third stage of the European Economic and Monetary Union (EMU) commenced on January 1, 1999 with the launch of the European single currency, the euro. The first round of participants comprises 11 of the 15 European Union (EU) nations, dubbed “Euroland.” The potential implications of EMU for Asia are immense. The euro's emergence as an international currency and its impact on Asia can be assessed in 3 different domains: (1) as a medium of exchange for Europe's trade with Asia; (2) as a store of value in stocks and bonds in world capital markets; and (3) as part of official foreign exchange reserves of Asian central banks. Our analysis suggests that there is potential for the euro to play a bigger role in EU-Asia trade links, which will be underpinned by the collective importance of Euroland as a much-enlarged trading and investment partner for Asia. However, in the short term at least, Asian equity markets are unlikely to benefit from significant inflows of capital from the EU as the former have been decimated by the region's financial crisis. As for Asian bond markets, rapid deterioration of sovereign ratings of countries in the region over the past 12 months would make it difficult for Asian companies to raise funds through euro-denominated debt instruments. As for official foreign exchange reserves, the bulk of Asian reserves is currently held in US dollar assets. Judging from Asian trade and debt figures, it seems unlikely that the euro would challenge the US dollar as a reserve currency any time in the near future. Nevertheless, in the longer term, the euro's introduction could make it easier for Asian central banks to diversify their reserves from the greenback to the euro. The internationalization of the euro is likely to happen only gradually, whether in terms of international trade denomination and settlement, denominating international financial assets, or as a reserve currency. Since the magnitude of shock that the single European currency would bring to the international monetary system is still unknown, only very tentative conclusions for the impact on Asian countries can be drawn at this point in time.     

Facing the Euro: Prospects for growth or stagnation?

The introduction of the euro has been overshadowed by the controversy over the appointment of the president of the European central bank and the possible implications for the bank’s policies. The effects of the launching of the single currency on growth and employment depend on a multitude of factors, however. Professor Welfens analyses the potential benefits of EMU and discusses the problems to be solved.     

The Prospects for Future Economic Growth in the Euro Area

With a long-term projection of TFP growth of 0.2 per cent, a gradual decline in the work-age population and a static average workweek, we project a "baseline" average real GDP growth rate in the euro area of just 0.6 per cent over the next decade — even if the unemployment rate and investment share of GDP return to their pre-crisis levels by 2020.     

Introduction of the Euro and the Dense Society

The author voices her misgivings over a purely "technical" introduction of the new single currency. The present social, cultural, economic and political crisis of modern Europe is sketched, and the concept of the "dense society" is used to describe an expanding society with restricted mobility, limited vitality and excessive focus on the present. The special relation between society and finance is also amplified. Against this background, it is maintained that there is a need to restore a virtuous link between the business and finance world and society, stressing, among other things, innovative entrepreneurship, investment flexibility, new forms of work, and the creation of collective mutuality. The introduction of the euro must be connected not only in symbolic but also in concrete terms with a resurgence of development, mobility and social inclusion.In addition, the author describes the specific problems with the changeover to the euro that she sees for Italy, a nation where a very positive attitude towards the euro prevails but where there is little knowledge of the mechanisms of the changeover. The specific characteristics of the retail trade as well as the savings and investment patterns may create particular problems for Italy in connection with the changeover.     

Reflections on the Euro Area Fiscal Stance

Avoiding the mistakes of the past, when the good times were not used to build buffers, will be crucial to avoid countries again being forced to engage in a pro-cyclical fiscal tightening in the next downturn.