EU - Economic Factors and the European Union (Lesson)

Economic Factors and the European Union

Introduction 

Now it is time to explore the economic factors that affect Europe today. From the economic systems of the nations of Europe to the European Union, we will investigate the issues that affect European nations every day.

 

Economics

Economics refers to the way countries manage their natural and human resources as well as the way they manage their money and how they produce, buy and sell goods and services. Goods are products that are manufactured or produced, like cars, televisions and even food. Services are duties performed by one person for another person for a price.  Examples of services are teaching, cutting someone's hair or driving someone to the airport. 

Free trade means that people can buy or sell goods and services. In a market economy, prices are determined by the demand for a product or service. Demand is the measure of how many people want to buy a particular good or service.

 

Economic Systems

To compare economic systems we have to ask questions:

  1. What is produced?
  2. How is it produced?
  3. How much is produced?

An economic system is a set of social institutions which deals with the production, distribution, and consumption of goods and services in a particular country.

There are 4 types of economic systems we will explore:

  1. Market
  2. Command
  3. Traditional
  4. Mixed

As of 2017, the European Union’s countries have one of the largest economies in the world with a Gross Domestic Product (GDP) of over $16.1 trillion dollars.

 

Germany

Map of Germany Germany has the 3rd highest GDP in the world, has the largest economy in all of Europe, and is a leader in the European Union. Germany has a mixed economy that is made up of 71% market and 29% command economies. Germany has a highly productive agricultural system. The land and climate is very well suited for farming. Germany grows and produces more than enough food for its citizens and exports much of the surplus to other countries. Germany's industry is unsurpassed allowing for a very strong economy. Germany is a major producer of cars, steel, chemicals, and electrical equipment. Because of its ongoing strong economy, Germany has one of the highest literacy rates in the world. More than 99% of Germany's citizens can read and write.

An economic challenge that Germany faced after the end of the Cold War was reunification. In 1990, East Germany and West Germany were forced to come together under one government. West Germany was more modern and had many skilled workers while East Germany's workers were unskilled. In addition, the factories in East Germany were old and outdated. The eastern economy could not compete with the new technologies in the west. As a result, the economy in Eastern Germany continues to fall behind the economy of Western Germany despite reunification.

Map showing the division of Germany during the Cold War. Left was West Germany, Right was East Germany with the city of Berlin split in 2 as well.  

United Kingdom

Map of the United Kingdom. The United Kingdom is made up of 4 nations - England, Scotland, Wales and Northern Ireland. It is also called Great Britain. The United Kingdom has the 5th largest GDP in the world and the 2nd largest economy in Europe. Like Germany, the United Kingdom has a mixed economy consisting of 71% market and 29% command.

Over 250 years ago, the United Kingdom became the birthplace for the Industrial Revolution. The Industrial Revolution sparked the manufacturing industry in Europe that continued to spread through Europe and the United States. Today, manufacturing and machinery production continue to be a major export in the United Kingdom.

The United Kingdom has many natural energy sources located underneath the North Sea including oil and natural gas. The United Kingdom has enough reserves to satisfy their own fuel needs, and therefore, has become a major exporter of oil and natural gas. The exportation of oil and natural gas is highly profitable.

Because of its ongoing strong economy, the United Kingdom also has one of the highest literacy rates in the world. More than 99% of its citizens can read and write.

 

Russia

Russia has the 11th highest GDP in the world. Russia once had a command economy controlled by the Communist party. After the end of the Cold War and the fall of the Soviet Union, Russia's economy steadily changed to a market economy. Russia's economy is made up of 51% market and 49% command.

Russia has many natural resources including fossil fuels such as oil, natural gas, and coal. Russia's fossil fuels are the primary reason for its economic growth.

Russia also has an abundant amount of fine metals such as copper and gold. Other resources include timber and steel.

Like Germany and the United Kingdom, Russia has a very high literacy rate. More than 99.4% of Russia's citizens can read and write.

Map of the world showing nations with Higher and lower GDP's then Russia. Russia is the medium blue nation at the top of the map.

Russia is in medium blue at the top of the map.

 

Explore the Economic Systems

 

How much do you know about the European Union?

 Read each of the questions below. Consider your answer. Then click on the question to see if you are correct.

 

 

Image of an Arrow 

 


Think About This

 

By now you have had time to investigate the economic systems of Europe and have learned basic information about the European Union. Now it is time to move on to learn even more about the economic factors as well as the environmental challenges facing Europe today.

 


BACKGROUND MAP OF EUROPE IS IN THE PUBLIC DOMAIN, VIA WIKIMEDIA COMMONS, GAVS ADAPTED.
MAP OF THE UNITED KINGDOM BY MATT LEWIS, CC-BY-SA, VIA WIKIMEDIA COMMONS
MAP OF RUSSIA BY QUANDAPANDA, CC-BY-SA, VIA WIKIMEDIA COMMONS.
ALL OTHER IMAGES CREATED BY GAVS