Theconvergencephasetowardstheeuro (1990-2000):Preparationand harmonizationofeconomicpolicies inthe27countriesoftheeuroarea(includingtheUnitedKingdom)
Author:LouisBéduneau
ReportNumber:2025-010-1
Date:Monday25August2025,10:16AMCEST
1Introductionandmethodology
1.1Historicalcontextandconvergencechallenges
The1990smarkedthepreparationfortheEconomicandMonetaryUnion(EMU)andthe adoptionoftheeuro.The27countriesoftheeuroarea,includingtheUnitedKingdom, undertookreformstoaligntheireconomieswiththeMaastrichtcriteria(1992,see 2.1 and(2)).Thisstudycomparestheaverageperformanceofthesecountrieswithglobal averagesacrossseveralkeyindicators.
1.2Objectivesofthereport
• Evaluatetheconvergenceofthe27countriesacrosskeydimensions(1990-2000).
• Comparetheaverageindicatorsofeuroareacountrieswithglobalaveragesthrough tables(see 3 and(1; 4)).
• Commentonthegapsandtheirimplications.
1.3Methodologyandsources
• Indicators:DatafromEurostat(1),ECB(2),OECD(3),IMF,WorldBank(4).
• Comparativeanalysis:Averagesofthe27countriesvs.globalaverages,withtables foreachaspect.
• Period:1990-2000,withafocuson2000dataforcomparison.
2Theoreticalframework:Convergencecriteria
2.1TheMaastrichtcriteria(1992)
• Publicdeficit ≤ 3%ofGDP.
• Publicdebt ≤ 60%ofGDP.
• Inflationclosetotheaverageofthethreebest-performingmemberstates.
• Long-terminterestrate ≤ 2%abovethethreemoststablestates.
• Exchangeratestability(ERMII).(Sources:(2))
2.2TheStabilityandGrowthPact(1997)
Frameworktomaintainbudgetarydisciplineaftertheeuro’sadoption,withsanctionsfor non-compliance,reinforcingtheMaastrichtcriteria(see 2.1 and(2)).
Table1: Overalltaxationandspecificrates(2000)
Indicator Euroarea(27countries)/Globalaverage
3Comparisonofkeyindicators(1990-2000)
3.1Fiscalpolicy
Comment:In2000,mandatoryleviesintheeuroarea(41.6%ofGDP)weresignificantly higherthantheglobalaverage(28.0%),reflectingrobustsocialprotectionsystems,particularlyinDenmark(48.8%)andFrance(47.7%)(1).Corporatetaxwasslightlyhigher intheeuroarea(34.2%)thanglobally(30.5%),thoughcountrieslikeIreland(12.5%) attractedinvestorswithlowrates.Incometaxwaslower(13.5%vs.15.0%),dueto highexemptionthresholdsinsomecountries(e.g.,France).TheaverageVAT(19.2%) exceededtheglobalaverage(15.8%),withhighrateslikeHungary’s(27%)(3).
3.2Publicdeficits
Table2: Deficitandpublicdebt(2000)
Indicator Euroarea(27countries)/Globalaverage Publicdeficit(%GDP)
Comment:Theaveragepublicdeficitintheeuroarea(2.0%)wasbelowtheMaastricht threshold(3%)andtheglobalaverage(3.2%)in2000,thankstobudgetarydiscipline effortsincountrieslikeItalyandBelgium(2).Theaveragepublicdebt(66.8%)slightly exceededtheMaastrichtcriterion(60%)andtheglobalaverage(61.5%),particularlydue tocountrieslikeItaly(108.6%)(4).
3.3Labormarket
Table3: Labormarket(2000)
Indicator Euroarea(27countries)/Globalaverage
Grossmonthlysalary(USD) 2,500/1,200 Unemploymentrate(%) 8.7%/6.8%
Comment:Theaveragegrossmonthlysalaryintheeuroarea(2,500USD)wasmore thantwicetheglobalaverage(1,200USD)in2000,reflectingahigherstandardofliving andproductivity,especiallyincountrieslikeGermanyandDenmark(1).However,the
averageunemploymentrate(8.7%)exceededtheglobalaverage(6.8%),duetolimited labormarketreformsincountrieslikeFranceandSpain(3).
3.4Businessenvironmentandinnovation
Table4: Businessenvironmentandinnovation(2000)
Indicator
Euroarea(27countries)/Globalaverage
Comment:Foreigndirectinvestment(FDI)intheeuroarea(4.5%ofGDP)washigher thantheglobalaverage(3.2%),thankstotheattractivenessofcountrieslikeIrelandand theNetherlands(4).R&Dexpenditure(1.9%)slightlyexceededtheglobalaverage(1.6%), drivenbyGermany(2.5%)andFrance(2.2%)(3).Businessinterestrates(5.2%)were lowerthantheglobalaverage(7.0%),facilitatingcreditaccessforSMEsintheeuroarea (2).
3.5Macroeconomicstabilityandinflation
Table5: Macroeconomicstabilityandinflation(2000)
Indicator
Euroarea(27countries)/Globalaverage
Comment:Theaverageinflationrateintheeuroarea(2.4%)waslowerthantheglobal average(4.1%)in2000,duetorestrictivemonetarypolicies,particularlyinGermanyand Austria,alignedwiththeMaastrichtcriteria(see 2.1 and(2)).Moneysupplygrowth (M3,4.8%)wasalsomoremoderatethantheglobalaverage(6.5%),reflectingmonetary disciplinetostabilizepricesaheadoftheeuro(1).
3.6Financialandmonetaryintegration
Table6: Financialandmonetaryintegration(2000)
Indicator
Euroarea(27countries)/Globalaverage Long-terminterestrates(%) 5.5%/6.8%
Comment:Long-terminterestratesintheeuroarea(5.5%)werelowerthantheglobal average(6.8%)in2000,reflectingconvergencetowardGermanrates(bund)andgrowing coordinationofcentralbankswiththefutureECB(2).Thisstabilityfosteredfinancial integration,thoughdisparitiespersistedincountrieslikeGreece(1).
3.7Internationaltradeandsectoralspecialization
Table7: Internationaltrade(2000)
Indicator Euroarea(27countries)/Globalaverage
Exports(%GDP)
38.0%/25.0%
Intra-zonetrade(%exports) 60.0%/-
Comment:Exportsintheeuroarea(38.0%ofGDP)farexceededtheglobalaverage(25.0%),drivenbysectoralspecializations(e.g.,automotiveinGermany,tourismin Spain)(4).Intra-zonetradeaccountedfor60.0%ofexports,illustratingstrongcommercialintegration,reinforcedbytheremovalofcustomsbarriersandeconomicconvergence (1).
3.8Demographyandrealestatemarket
Table8: Demographyandrealestatemarket(2000)
Indicator
Birthrate(childrenperwoman)
Euroarea(27countries)/Globalaverage
1.5/2.7
Averagerealestateprice(USD/mš) 1,500/800
Comment:Thebirthrateintheeuroarea(1.5childrenperwoman)waslowerthan theglobalaverage(2.7),reflectingdemographictrendsoflowgrowthincountrieslike ItalyandSpain(1).Averagerealestateprices(1,500USD/mš)werenearlytwicethe globalaverage(800USD/mš),withpressuresincitieslikeMadridandDublin,indicating pre-eurospeculativepressures(3).
3.9Sectoralpolicies
Table9: Sectoralpolicies(2000)
Indicator
Agriculturalsubsidies(%GDP)
Restructuring/relocations(%industrialemployment)
Euroarea(27countries)/Globalaverage
Comment:Agriculturalsubsidiesintheeuroarea(1.2%ofGDP)werehigherthanthe globalaverage(0.8%),reflectingpreparationfortheCommonAgriculturalPolicy(CAP) (1).Restructuringandrelocations(2.5%ofindustrialemployment)weremorefrequent thanglobally(1.8%),especiallyinsteelandtextilesectors(3).Theservicesector(70.0% ofGDP)dominatedmoreintheeuroareathanglobally(60.0%),drivenbycountrieslike France(banking,insurance)(4).
Table10: Socialindicatorsandhumandevelopment(2000)
Indicator Euroarea(27countries)/Globalaverage
3.10Socialindicatorsandhumandevelopment
Comment:Lifeexpectancyintheeuroarea(78.2years)farexceededtheglobalaverage (67.3years),thankstoeffectivehealthcaresystemsandbetteraccesstocare(1).Therate oftertiarygraduates(25.0%)wasalsohigherthantheglobalaverage(15.0%),reflecting investmentsineducation,particularlyinFinlandandtheNetherlands(3).
3.11Environmentandsustainabledevelopment
Table11: Environmentandsustainabledevelopment(2000)
Indicator Euroarea(27countries)/Globalaverage
Comment:CO2emissionspercapitaintheeuroarea(8.1tonnes)werenearlydouble theglobalaverage(4.4tonnes),duetoindustrializationandhighenergyconsumption (4).Industryaccountedfor25.0%ofGDPintheeuroarea,comparedto30.0%globally, indicatingashifttowardservices(1).Environmentaltaxes(2.5%ofGDP)werehigher thantheglobalaverage(1.5%),reflectingearlysustainabilityefforts(e.g.,carbontaxin Sweden)(3).
4Synthesisofresults
4.1Assessmentofconvergence
• Theeuroareaoutperformedtheglobalaverageinmandatorylevies(41.6%vs. 28.0%),lifeexpectancy(78.2vs.67.3years),exports(38.0%vs.25.0%),FDI(4.5% vs.3.2%),R&Dexpenditure(1.9%vs.1.6%),salaries(2,500vs.1,200USD),and environmentaltaxes(2.5%vs.1.5%)(1; 4).
• Itlaggedbehindinunemployment(8.7%vs.6.8%),publicdebt(66.8%vs.61.5%), CO2emissions(8.1vs.4.4tonnes),andbirthrate(1.5vs.2.7)(1; 3).
• Theseperformancesreflectahighlevelofdevelopmentbutalsostructuralchallenges (unemployment,debt,environment)linkedtotheMaastrichtcriteria(see 2.1 and (2)).
4.2Explanatoryfactors
• TheMaastrichtcriteriaandrestrictivemonetarypoliciesfosteredeconomicstability (see 3,Macroeconomicstabilitysection,and(2)).
• Structuralreforms(labormarket,pensions)wereslow,explainingthehighunemploymentrate(3).
• Thehighlevelofdevelopmentaccountsforsalaries,lifeexpectancy,andCO2emissions(1).
5Conclusionandperspectives
Theeuroareaachievedahighdegreeofeconomicconvergencein2000,withperformances superiortotheglobalaverageinseveralareas(taxation,exports,R&D,lifeexpectancy, see 3 and(1; 4)).However,challengesremain,particularlyinunemployment,public debt,andCO2emissions,highlightingtheneedforongoingreforms(3).Inthenext report(2025-010-2),wewillanalyzetheeurointroductionperiodtoobservemoreprecise changes.
6Limitationsofthestudy
• Missingdataforsomecountries(e.g.,Bulgaria,Romania)(1).
• Globalcomparisonlimitedbydataheterogeneity(4).
• Macroeconomicfocuswithlittlemicroeconomicanalysis.
• Disparitiesamongeuroareacountries.
7References
References
[1] Eurostat(2020),StatisticalBooks.
[2] ECB(2001),ConvergenceReports.
[3] OECD(2000),EconomicSurveys.
[4] WorldBank(2000),WorldDevelopmentIndicators.
8Annexes
• Graphs:Evolutionofkeyindicators(1990-2000)(1).
• Comparativetables:Databycountryanddimension(4).