| Monetary unions have been a recurring element in European history. All past attempts have, however, produced lackluster results. Yet, the desire for economic and political integration has not abated. Proponents point to expected gains resulting from an enlarged market, the better quality of life, and improved security that would accrue for Europeans. In particular, a bigger Europe, the proponents argue, would unseat the United States from world economic and political dominance.; The progress of the European Monetary Union to date, however, indicates mixed results. The euro has not been able to exert the kind of dominance over the U.S. dollar as it was hailed to. Moreover, the better quality life that Europeans were promised is yet to materialize. One might then ask: Why?; Mundell's seminal work on Optimum Currency Areas (OCA) in 1961, and additions to it by Kenen, McKinnon and others, indicate that Europe is not such an area, where a monetary union could work effectively. EU member countries are highly divergent economically, politically, socially, culturally, and in many other ways.; In pursuit of the argument that the EU does not constitute an OCA, this study tested the extent to which the economies of members of the EU are correlated. It applied several measures to gauge the level of EMU's economic integration. The study included culture, as one of the measures, on the suspicion that cultural dimensions are a major moderator variable in the process of integration.; Methodology involved using EU data collected from the World Bank and then applying correlational analysis to it. The study found that EMU members indeed were not highly correlated in all the variables tested. As suspected, the study also found that the impact of Cultural Dimensions was quite profound in the assessment of this economic integration process. |
