In 1957 six countries (Belgium, France, Germany, Italy, Luxembourg and The Netherlands) set up the EU to encourage political and economic cooperation.
The EU now has:
• 28 member countries
• a population of over 500 million, and
• 31% of the world’s wealth
There are significant variations in levels of development in the EU. HDI is high for every member country. All are in the top 60 in the world. Life expectancy is always over 70 year, but it is significant that some are over 80, indicating an extremely high standard of living. GDP per capita is the indicator that really shows the clearest differences. Luxembourg’s GDP per capita is almost seven times higher than that of Bulgaria. The older members have higher GDP per capita than the newer ones.
Contrasting two EU countries: Bulgaria and Germany
Bulgaria is less developed than Germany because:
- The climate is temperate (not too hot and not too cold) but there are droughts in summer, and high snowfall and storms in winter. This makes farming difficult.
- Part of Bulgaria is very mountainous e.g. the Rhodope mountains cover 12,233 sqkm of Bulgaria. The land on the mountains is stepp and has poor soil, also making farming difficult in these areas.
- Bulgaria was a communist country between 1944 and 1990, the government didn’t invest in developing the economy.
- There have been problems with political corruption since 1990 so there was little investment in developing the economy.
- Bulgaria only joined the EU in 2007 which meant that trading was more expensive before then.
- It only has a population of 8 million so has fewer workers to boost the economy.
- Literacy rates are slightly lower than elsewhere in Europe meaning the workers are not as skilled.
- Lots of young people have migrated to elsewhere in Europe meaning that they have lost workers.
- High population of 82 million meaning lots of workers to boost the economy
- Good trade links; it was a founding member of the EU
- A stable government which has meant constant investment in developing the economy
- Flat, fertile land which is good for agriculture
- Rhine-Ruhr valley which has attracted industries due to its location on the River Rhine (for exporting products) and its mineral deposits (coal)
- Well developed manufacturing and service industries which are very profitable
The EU is trying to reduces inequalities within the EU
European Cohesion Fund
The ECF cover environmental and transport infrastructure projects, as well as the development of renewable energy. The fund is reserved for countries with living standards that are less than 90% of the EU’s average.
Urban II fund
This initiative puts investment into some of the most deprived urban areas of the EU. It attempts to:
- Improve living conditions
- Create jobs in urban areas
- Provide education for disadvantaged groups
- Develop environmentally friendly transport.
European Regional Development Fund
This initiative invests into developing infrastructure, which in turn will make areas more attractive for commercial investment.
The Common Agricultural Policy
This provides subsidies for farmers to keep them in agriculture. This helps Europe provide its food and also helps the survival of rural areas. Many think that this scheme has rescued rural areas, whilst others argue it is a waste of money (agriculture generates less than 2% of the EUs GDP, but the CAP costs 40% of the EU’s budget).
European Social Fund
This pays for education and training schemes, focusing on improving the skills of a country’s people. The fund also invests into job creation.
European Investment Bank
The EIB’s money comes from the EU member countries. Countries contribute according to size and wealth. In 2004 in contributed €160 billion to regional development schemes. It generates money by investing on world financial markets.