The European Monetary Union
The European Monetary Union was established in January 1999, when eleven European countries adopted a unified currency. Membership in the EMU required each country to meet the requirements outlined in the Maastricht Treaty in order to ensure a high level of minimal merging among the members (Rastrigina & Sutherland, 2013). This stage laid the groundwork for the proposal of a unified fiscal policy that would result in a workable financial and monetary system due to the appropriate homogeneity conditions in place (Marti& Perez, 2015). Spain has reaped numerous benefits since abandoning the peseta and adopting the euro as its currency, as described below. The steadiness stemmed from the EMU's macro-economic outline including the financial guidelines of the Stability and Growth Pact (SGP) which help members to secure a transformed commitment to significant public finance. Before joining the union, Spain experienced the internal currency straining which adversely affected the economy and further business operations (Marttı & Perez, 2015). Therefore, the European Central Bank (ECB) takes the tribute for fixing inflation prospects in Spain through handling the monetary policy quickly deliberated confidence and credibility of the euro.
Improved Gross Domestic Product
The Gross Domestic Product per capita of Spain increased from 84% (of the Eurozone average) in 1999 to 95% in 2007. The adoption of the euro to replace the unstable peseta also reduced the borrowing cost in Spanish financial institutions (Ortega& Penalosa, 2013). The decline in lending charges has enabled the Spanish corporations to compete in a universal economy.
Globalization of economic activities
The spread of information and communication technology in the Eurozone has resulted in rising international integration in finance and trade which promote mobility of capital. With globalization, the flow of goods and services between Spain and other member countries of the euro area has increased significantly. Additionally, capital revolution and international migratory movements have been enhanced (Caporale et al., 2011). Globalization has brought about certain structural changes and efficiently reinforced macro-economic policies which increase the absorption of economic shocks in Spain (Sapir, 2011). Consequently, the integration of capital markets and the innovation of financial products were designed. This setting marked the availability of credit, abundant liquescency as well as the low-risk cost.
Creation of employment
Economists argue that Spain has employed the most aggressive measures to slacken off its competitive labor market, which has led to the reduction of the unemployment rate to 11.4% from a misery level of over 20 % in the early 1990s. Since joining the Eurozone, Spain has created over 3 million jobs. Employment creation has been accelerated by external aid and investment and internal reforms (Martin et al., 2012). The improved economy and the capital flowing into the country have equipped Spaniards with the proper skills enabling them to compete in the international labor market favorably.
Conclusion
Spaniards have realized an exceptional rate of job creation of about 3 million since joining the European Monetary Union that is about one-third of the total employment opportunities created in the Eurozone. Also, Spain, in conjunction with the Stability and Growth Pact, has engaged a complete management of its public finances. Through intense financial consolidation, government debt has significantly reduced, and this has enabled Spain to post an extra 2.2% of Gross Domestic Product in 2007. Therefore, being a member of Eurozone, Spain will benefit significantly by developing the economy further.
References
Caporale, G., Ciferri, D., & Girardi, A. (2011). Are the Baltic Countries ready to adopt the Euro?
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Marttı, F. & Perez, J. J. (2015). Spanish public finances through the financial crisis: Fiscal
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Martin, P. & Mayer, T.,& Thoenig, M. (2012) The Geography of Conflicts and Regional Trade
Agreements. American Economic Journal: Macroeconomics, 4(4): pp. 1–35.
Ortega, E. & Penalosa, J. (2013) Some thoughts on the Spanish economy after five years of
crisis’, Bank of Spain, Occasional Paper no. 1304.
Rastrigina, O. & Sutherland, H. (2013) The distributional effects of fiscal consolidation nine
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