The Institutional Development of the European Union in the 1990s and Its Industry Specific Effects: A Case of the Automobile Industry

This study attempts to identify the measures and policies related to the institutional development of the EU in the 1990s and the mechanisms that resulted in specific consequences on the automobile industry. The removal of visible and invisible barriers to internal trade has promoted the competitiveness of the industry by enhancing the accessibility to expanded markets which has increased the capacity of firms to reduce unit cost by realising scale economies. The measures of the Single Market Programme promoting standards (such as technical harmonisation and emission control, fair competition, and liberalisation of distribution channels by further abolition of block exemptions together with strong challenges from overseas) increased overall competition. Also, figures show that the introduction of the single currency provided the automobile industry with a more stable business environment stemming from reduced transaction costs and elimination of the risks of exchange-rate fluctuations.