The Eurozone is a polarised economic model

27th April 2012

The Eurozone is not a uniformly successful economic model. For one group of member states to succeed another group will fail. This is as a result of the Euro providing a single currency value across the whole of the Eurozone, which in turn alters each member states relationship with foreign exchange and trade. This relationship has helped the stronger states like Germany and the Scandinavian member states, but it has come at the expense of the weaker Eurozone states namely the PIIGS.

Countries in the Eurozone that receive high demand for their goods from outside the Eurozone will benefit from being in the single currency. The high demand for goods produced in countries like Germany would normally push up the price of the currency and make the country less competitive. When a foreign buyer wishes to purchase goods in another country they will have to obtain the currency of the seller to do so. The higher the demand for those goods the higher the demand for the currency in which they can be purchased in. Thus successful manufacturing and exporting countries become less competitive over time as they become more in demand…(read more)

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