ECONOMIC INTEGRATION
Economic Integration
Definition of 'Economic Integration'
An economic arrangement between different regions marked by the reduction or elimination of trade barriers and the coordination of monetary and fiscal policies. The aim of economic integration is to reduce costs for both consumers and producers, as well as to increase trade between the countries taking part in the agreement.
Investopedia explains 'Economic Integration'
There are varying levels of economic integration, including preferential trade agreements (PTA), free trade areas (FTA), customs unions, common markets and economic and monetary unions. The more integrated the economies become, the fewer trade barriers exist and the more economic and political coordination there is between the member countries.
By integrating the economies of more than one country, the short-term benefits from the use of tariffs and other trade barriers is diminished. At the same time, the more integrated the economies become, the less power the governments of the member nations have to make adjustments that would benefit themselves. In periods of economic growth, being integrated can lead to greater long-term economic benefits; however, in periods of poor growth being integrated can actually make things worse.
Approaches to economic integration include:
Global integration via the World Trade Organization
Bilateral integration between two countries
Regional integration via an economic bloc
Arguments Surrounding Economic Integration
A number of arguments surround economic integration. They center on (1) trade creation and diversion, (2) the effects of integration on import prices, competition, economics of scale, and factor productivity, and (3) the benefits of regionalism versus nationalism.
European Integration
1. Formation of a free trade area: the gradual elimination of tariffs, and other barriers to trade among members.
2. Formation of customs union: the creation of uniform tariff schedule
Definition of 'Economic Integration'
An economic arrangement between different regions marked by the reduction or elimination of trade barriers and the coordination of monetary and fiscal policies. The aim of economic integration is to reduce costs for both consumers and producers, as well as to increase trade between the countries taking part in the agreement.
Investopedia explains 'Economic Integration'
There are varying levels of economic integration, including preferential trade agreements (PTA), free trade areas (FTA), customs unions, common markets and economic and monetary unions. The more integrated the economies become, the fewer trade barriers exist and the more economic and political coordination there is between the member countries.
By integrating the economies of more than one country, the short-term benefits from the use of tariffs and other trade barriers is diminished. At the same time, the more integrated the economies become, the less power the governments of the member nations have to make adjustments that would benefit themselves. In periods of economic growth, being integrated can lead to greater long-term economic benefits; however, in periods of poor growth being integrated can actually make things worse.
Approaches to economic integration include:
Global integration via the World Trade Organization
Bilateral integration between two countries
Regional integration via an economic bloc
Arguments Surrounding Economic Integration
A number of arguments surround economic integration. They center on (1) trade creation and diversion, (2) the effects of integration on import prices, competition, economics of scale, and factor productivity, and (3) the benefits of regionalism versus nationalism.
European Integration
1. Formation of a free trade area: the gradual elimination of tariffs, and other barriers to trade among members.
2. Formation of customs union: the creation of uniform tariff schedule