Europe’s path to new directions
Euroute Recovery
Europe faces considerable challenges. It seeks to achieve economic stability. It must also adapt to a changing geopolitical landscape. Deglobalization trends are evident in trade in goods and foreign direct investment. They are less visible in areas such as services or innovation. These trends can have complex implications for global value chains and economic efficiency. They affect the allocation of capital. They also influence incentives for R&D. Structural transformations are needed to achieve climate neutrality.
The COVID-19 pandemic has exposed the vulnerabilities of global supply chains. It has also highlighted the dangers of over-reliance on foreign industries for essential supplies. It has served as a catalyst. This has prompted countries to reassess their industrial strategy. This reassessment includes sectors such as health and technology. In the area of supply chain resilience, industrial policy has become a key tool. Industrial policy protects countries from supply chain disruptions. It strengthens national capabilities and promotes economic diversification. Countries source from multiple geographies and companies. This strategy reduces economic vulnerabilities in times of crisis.
The European Union today and yesterday’s challenges
In addition, escalating geopolitical tensions and looming trade wars have prompted countries to re-adopt industrial policy. Governments are adopting these strategies to cope with uncertainties. They are also seeking to secure a competitive advantage in strategic sectors such as defense, energy, and artificial intelligence. The European Union itself is reflecting on the positive externalities of Member States’ investments in defense. It is also considering the role of the EU in promoting these investments. At the same time, it is preserving its single market. The EU is putting in place its first-ever common defense industrial strategy. This aims to strengthen Europe’s preparedness and security.
The European Union’s response to the new world order
The EU’s response to these current trends is crucial. Its position in the new world order could determine its economic potential. It could also influence its well-being and the development of its single market. Its currency is celebrating its 25th anniversary this year. It can play an important role in defining the geopolitical position. It can also influence the geoeconomic position of the European Union.
The 25th anniversary of the introduction of the euro prompts reflection on current economic research issues surrounding this currency. Adopted by 20 of the 27 EU Member States, the euro has sparked much discussion. These discussions focus on its influence on the stability and growth of the euro area economy. They also focus on its potential international role. A stronger international role for the euro has much to offer. This benefits not only the euro area and the EU, but also the entire international monetary system. There are many policy initiatives underway. They include the European Banking Union. They also include the European Capital Markets Union. They encompass the digital euro and they include the enlargement of the euro area and the EU. These initiatives can help to unleash the full potential of the euro as a dominant currency. This would also strengthen the EU’s influence on the world stage.