The European Union covers almost half of Europe. The region comprises of 28 member states who have the common interest of doing business. The region covers between Belarus, Ukraine, Russia, southeastern Europe, and the North Atlantic Ocean. The whole region covers about 3,976,372 square kilometers, which is less than half of the whole area covered by the United States of America. The coastline of the area is about 65,413.8 kilometers. The area experiences cold temperature to the north side, mild winters and hot, dry summers in the south of the region. The terrain of the area is flat along the Baltic and Atlantic coast while the central and southern areas are mountainous. The area has a number of natural resources like lead, zinc, coal, potash, natural gas, uranium and many others. The region experiences hazards such as earthquakes, avalanches, droughts in Spain and ice floes.
The European Union comprises of a diverse ethnic backgrounds with different cultures. Each country has its holidays, history and traditions. The social and economical activities of the communities and states of the European Union results from the historical practices of the indigenous people. The region has four major cultural divisions that include the Atlantic Fringe, which consist of the Netherlands, Spain and Portugal and Northern and Western France. The majority of people in the Atlantic Fringe historically depended on cattle and fish as their stable food. The Plain cultures include England, German, Romania among others, the people in this area value communal cooperation. The Mediterranean area comprises of the plateau of Spain and southern Portugal. The Mediterranean people have a history of both richness and poverty; they value family more than anything, and the unit of family is crucial. The Alpine Area comprises of mountains and most of the people in the area valued livestock more than crops. Since modernization, people in the four divisions live in cities. Christianity remains the dominant religion in the European region, although some countries practice Judaism and Islam.
Politics in European Union evolves in a high rate, and historical cultures and geographical features of the areas contribute majorly in shaping the political nature. The area has experienced a number of political strains foe example the world war I and World war II arose because of the politics of the European region. The European Union controls the politics of the whole Europe following the collapse of the communist union; some of the countries that were in the communist union have joined the European union. Some of the European countries have not joined the European Union because of political struggles within the region. The countries in the European Union use a common currency, Euro, €. Other countries use their currencies, for example, England value the pound more than the Euro by using the pound in their transactions. A common currency is important for the regional business since it quickens the exchange process.
International business and relations form the major part of globalization. Determination of the exchange rate has a considerable literature and enables the performance of the countries economically. The rapidly expanding literature in international business shows the potential of regional business and integration in improving the levels of doing business in the world. Currencies and the economy of the country form the major part in the determination of exchange rate. According to the literature, most countries have forged ways of using simple versions portfolio balances in the exchange rates. The research conducted on the newly entered members of the European Union show that the fluctuations of the exchange rate resulted to the reduction of profits of the goods traded.
Stewart and Trussel 2006 researched on the use of interest swaps in improving the level of doing businesses in regional and international areas. The interest swaps determine the periodic payment of the loans acquired by parties. The diversity of the economic status of countries determines the interest rate charged on the loans, the research showed that regional integration is important in reducing interest rate charged (Stewart & Trussel 2006)).
The introduction of the single European currency is one of the milestones in international markets, the 16 member states of the region who have abandoned their national currencies enjoys the benefits of the common currency. The member countries expected their economies to dominate over the international markets and shield from the adverse shocks, but ten years down the line the Euro remains in the same state. The difficult of measuring the growth of the Euro is limited to the data obtained from the quantifying effects of the Euro on trade. The effects of the common currency on financial integration are prerequisite for international capital flows. The advantages of the common currency in business depend on the business ventures that attract investors to engage in business.
The continued improvement of international correlation improves the relationship between the member states. The international correlation among stock markets has shown a major growth in the recent 30 years. The higher level of correlation in the stock market minimizes the changes of international diversification in the ways capital markets operate their business. Companies and individuals use cross-listing as a strategy to improve the level of recognition. According to Chess et al. 2008, the correlation of the capital markets has increased the need for regional integration and generated business opportunities across the globe (Sebnem 2010).
Taxing forms a major part that hinders or facilitates development of business in the regions. Countries that levy huge taxes to the investors and businesses bar most developments that are bound to happen. Countries like China is among the nations that have predominantly increased on the taxes levied on the international investors. The tax rate in China is a result of corruption in the top governing offices; Chung 2000 noted that the high level of corruption lowers the credibility of the country and impacts on the development levels.
The European Union has shown the best example in regional developments; the region has formulated ways of making business better and improve regional integration irrespective of the cultures of people. The literature in regional integration has shown the pros and cons of joining forces in economic growth. Use of common currency is among the important factors that contributes to the growth of regional integration, although not all the European Union members have fully abandoned using their national currencies the 16 member countries that use the Euro have benefited. The literature shows that the correlation of capital markets also improves on international correlation and reduces diversity in doing business. Regional integration will reduce the levels of corruption and other vices that affect economic growth.
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