An Economic Case For Federal Union

'A Wealthy Future'

When looking at the total GDP of the European Union in 2011 it accounted for $17,610.826 billion¹, making it the richest area in the world. The nearest runner up is the United States which accounted for $15,075.675 billion² in 2011. Naturally the US, as one entity, is able to get a lot more for its dollar than the EUs 27 separate member states can and the duplication of efforts inherent to our current setup creates a lot of waste in various areas from healthcare to defence (see this earlier article for more detail http://euro-file.blogspot.in/2012/11/an-argument-for-european-union-security.html).

However when comparing the EU and the US GDP per capita the US rates much more highly than the EU with the US having $48,328 per person whereas the EU has $35,973³ suggesting a better income distribution in the US, however we need to take into consideration the population difference with the EU having nearly 200 million more citizens that the US.

Typically a more useful comparison is a GDP per capita that is PPP (Purchasing Power Parity) adjusted, this takes into account the cost of living, however this doesn’t change results much for the US but for the EU the total drops by around $3,000⁴. Again we can view this discrepancy through the prism of population differential. This difference is likely to remain the case for the foreseeable future as the EU continues to expand and include more and former Warsaw Pact countries with large populations and, compared to the US and Western Europe, weak economies.

Of course because of the variety within Europe many EU countries approximate or score much more highly than the US when looked at individually. But as a federalist clearly this is an undesirable state of affairs. But what we can glean from these figures is that there great potential within the EU, as the richest ‘state’ in the world and with a proud tradition of social provision across much of the continent a federal Europe could turn this great wealth towards improving the situation of less developed nations thus improving the overall situation within the EU.

¹International Monetary Fund. http://www.imf.org/external/pubs/ft/weo/2012/02/weodata/weorept.aspx?pr.x=68&pr.y=4&sy=2011&ey=2011&scsm=1&ssd=1&sort=country&ds=.&br=1&c=001%2C998&s=NGDPD&grp=1&a=1

Accessed 19/12/2012

²International Monetary Fund. http://www.imf.org/external/pubs/ft/weo/2012/02/weodata/weorept.aspx Accessed 19/12/2012

³Wikipedia. http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28nominal%29_per_capita Accessed 19/12/2012

⁴Wikipedia. http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29_per_capita Accessed 19/12/2012