The economy of Europe is comprised of more than 665 million people in forty-nine different states. Like every continent, the wealth of Europe's states varies, although the poorest are well above the poorest states of other continents in terms of GDP and living standards. The difference in wealth across Europe can be seen in a rough East-West divide. Whilst Western European states all have high GDP's and living standards, many of Eastern Europe's economies are emerging from the collapse of the communist Yugoslavia and USSR.

As a continent, Europe has the largest economy. It's largest single economy is that of the United Kingdom, third globally behind United States of America and Japan.

Development

1945-1990

Following World War Two Europe's economy and infrastructure was in tatters. The vast majority of East European states came under the control of the USSR, and therefore a communist market-system (Yugoslavia also adopted this market-system but was not controlled by the USSR). Those states that retained free-markets where given vast amounts of aid by the USA in order to rebuild.

Western European governements moved to link their economies, laying the foundations for what would become the European Union (EU), (see History of the European Union for more infomation). This meant a huge increase in shared infrastructure and cross-border trade. Whilst on the main, these Western European states rapidly improved their economies, by the 1980's the USSR's economy was struggling, mainly due to the massive cost of the Cold War. The GDP and living standard of each East European state was behind that of their Western neighbours, even free-market Greece, situated in South-Eastern Europe, struggled due to geographical isolation from Western Europe.

1991-2004

When European communism collapsed in 1991, those countries which had used this system struggled to adapt to free-market systems. There was however, a huge variation in degrees of success, with states such as Hungary, Slovenia and Poland adapting reasonably quickly, but other states such as Belarus and Moldova struggled to reform their crumbling infrastructures.

Western Europe was quick to develop economic ties with the newly democratic East. Whilst the former USSR states dealt with change however, Yugoslavia descended into civil war, the nations making it declaring independance from dominant Serbia.

Peace did not come to Yugolsavia for a decade, and there are still European and NATO peacekeeping troops in Bosnia-Herzegovina, FYR Macedonia and Kosovo. This severly hampered economic growth, with only Slovenia making any real progress in the 1990's.

The economy of Europe was by this time dominated by the EU, a huge economic & political organisation with 25 of Europe's states as full members, with another eight with associated trade agreements. EU membership was seen as something to aspire to, and the EU in turn gave significant support and aid to those Eastern European states wishing to work towards achieving economies with pass the entry criteria. Most EU countries are part of the Eurozone, a currency union whereby each member uses a shared currency, the Euro, which replaced their former currencies.

Most European economies are in very good shape, and the continental economy reflects this. Conflict and unrest in Moldova and the Caucasus states are hampering growth in those states however.

Future

In 2005 the Russian dominated Commonwealth of Independant States (CIS) intends to create a rival trade bloc to the EU, open to any previous USSR state. 11 of the 14 have signed up, with the three Baltic states deciding to align themselves with the EU.

Bulgaria & Romania hope to join the EU in 2007, whilst Turkey and the remaining former Yugoslavian states hope to join sometime after 2010.

Maps & Charts