Text-study

1. Learn the following words

disturbance – нарушение, беспокойство, тревога;

susceptible – восприимчивый;

endowment – вклад, дар, пожертвование;

externality – вид;

magnification – увеличение;

fanning – верность;

cluster – объединение .

2. Complete the sentences with suitable words from the box

Economic integration; regional specialization; neoclassical growth theory; traditional trade theory; externalities in production; magnification; competition; national monetary policies; clusters

1. The economic case for the euro rests largely on the idea that it will hasten …

2. This in turn will promote …, leading to higher productivity and incomes.

3. The case against rests largely on the idea that "asymmetric shocks" - disturbances that affect some countries much more than others - will be harder to deal with in the absence of….

4. Economic theory suggests several connections between integration….

5. In standard …, integration makes countries more similar: once capital and labour are free to move, the mix in which the two are used tends to converge internationally.

6. … complements this finding.

7. … will cause high technology, high-wage industries to form … .

8. A lot depends on the level of … .

3. Answer the following questions

1. What idea does the economic case for the euro rest on?

2. What idea is the case against based on?

3. What does the author mean by "asymmetric shocks"?

4. What are the reasons for thinking that in a more integrated Europe countries will be more alike?

5. What connections between integration and regional specialisation are suggested by economic theory?

6. How is the problem viewed by modern economic theories?

7. What is the role of externalities, according to new growth theory?

4. Fill in the blanks with suitable prepositions

A recent study by the OECD reports some further evidence. First, it looks at a measure … output divergence (which asks, in effect, what proportion … each country's output would need to switch sectors … the country's pattern of GDP to conform to the euro-area average). The results suggest that specialization has increased since 1980 in most of the countries examined. But the findings are inconclusive. Using a similar measure, but looking at 60 sub-national regions within the euro area rather than … countries, and using employment… place … output, the researchers find the opposite: specialization has been falling, albeit gently, since the mid-1980s.

It is possible, indeed likely, that "new" and "neoclassical” effects are going on at the same time. A paper cited by the OECD shows that specialization … America has traced a bell-curve over time. Regional specialization increased during the 19th and early 20th centuries as manufacturing, prone, … the "new" view, to form clusters, gained ground … agriculture. Later, this trend reversed and specialization fell - notwithstanding the fact that America is today more specialized than Europe.