Is the euro good for Massachusetts?

from NewsLink, Vol. 4, No. 1, Fall 1999

 

January 2000 marks the first anniversary of Europe's new currency, the euro. Most European Union nations have adopted the euro and have formed themselves into the European Monetary Union. Their goal is to make their markets more efficient, facilitate trade and challenge the U.S. dollar's status as the predominate international currency. The 11 EMU nations are Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain.

Some European Union nations have decided not to join the EMU or therefore to adopt the euro. They are Denmark, Greece, Sweden and the United Kingdom.

What does this mean for Massachusetts? Bay State companies exported more than $5 billion worth of goods and services in 1997 (the latest year for which data are available) to the future EMU nations. This represents less than a quarter of all the Commonwealth's exports. Trade with the UK and other non-EMU European nations represents roughly 11% of all exports.

As the chart shows, Massachusetts exports to the EMU nations have been declining while exports to the non-EMU European Union nations have been steady. Exports to Asia, even through the Asian flu crisis, have risen and now exceed exports to the EMU nations.

We see the introduction of the euro as good news for Massachusetts exporters. By pushing the EMU nations to reduce transaction costs and to increase efficiency, the euro should help them recover economically from the current slump and to increase their demand for US products, including those from Massachusetts. (Credits: Aniko Laszlo, David Pace and Cristina Savescu)

 

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