Advantage Of Single Market

957 Words4 Pages
What are the benefits of the Single Market? The key element of the Single Market is to pursue the assurance of the free movement of four factors: goods, services, labor, and capital. First of all, the Internal Market for goods creates the achievement of economies of scale as a result of an enormous market of 500 million consumers and 21 million enterprises. Companies, especially large companies can manufacture more cost-efficiently by increasing economies of scale. Riley (n.d.) has demonstrated that “the size of market allows business to exploit economies of scale leading to improvements in productive efficiency”. Furthermore, economies of scale enhance international competitiveness, resulting in lower prices for consumers. Inefficient companies…show more content…
The free movement of capital has substantially contributed to facilitate Foreign Direct Investment activity within, to and from the Single Market. The freedom of movement of capital makes it easier and more attractive to invest in other European companies and increases European firms’ ability to invest in other member states. Forslid (2014) notes that the implementation of the single market led to increased flows of Foreign Direct Investment within the EU – national firms, previously protected by various trade barriers, sought to maintain their market positions. Such investments are likely to improve production efficiency through enhanced possibilities for large scale production. Moreover, Eastern European countries that have joined the EU and the single market have been able to attract foreign capital to a greater extent than non-EU countries in Eastern Europe. Friedrich et al. (2013) compared between the inflow of FDI into those Eastern European countries that joined the Single Market in 2004 and 2007 and Eastern European countries that did not. In addition, they compared industrial sectors that rely heavily on external capital and sectors that rely more on reinvested profits in each country. They found that sectors that require large external investments have grown faster than other sectors and this was only true for those Eastern European countries that have joined the…show more content…
The free movement of labor is believed to increase the efficiency of labor markets and to decrease unemployment with an improved match between demand and supply of workers. Countries may deal with labor shortages, especially in certain skilled positions or undesirable jobs that many domestic workers don’t want to do which can be solved by immigrants. Dayan and Trust (n.d.) in their research paper stated that EU immigrants account for 10% of registered doctors and 4% of registered nurses in the UK. Immigrants from outside the EU make up larger
Open Document