Member nations may find it easier to agree with smaller numbers of countries. By removing restrictions on labor movement, economic integration can help expand job opportunities.Ĭonsensus and cooperation. Studies indicate that regional economic integration significantly contributes to the relatively high growth rates in the less-developed countries.Įmployment opportunities. Due to a reduction or removal of tariffs, cooperation results in cheaper prices for consumers in the bloc countries. These agreements create more opportunities for countries to trade with one another by removing the barriers to trade and investment. The pros of creating regional agreements include the following: This is political integration and its culmination occurs when the co-operating countries are so integrated that they share the same foreign policies and merge their armies. A further step in the process of economic integration might be adoption of a common currency, with monetary policy regulated by a single central bank.An example is the European Union (EU).Īs the economies of the co-operating countries become completely integrated into a single market, there appears a need for common policies in social policy (education, health care, unemployment benefits and pensions) and common political institutions. This type is created when countries enter into an economic agreement to remove barriers to trade and adopt common economic policies. An example is the Common Market for Eastern and Southern Africa (COMESA).Ĥ. The primary advantage to workers is that they no longer need a visa or work permit to work in another member country of a common market. Like customs unions, there is a common trade policy for trade with nonmember nations. It is the point at which the economies of the co-operating states become so integrated that all barriers to the movements of labour, goods and capital are removed. The single market is the midpoint of the integration scale between political and economic integration. The Gulf Cooperation Council (GCC) is an example.ģ.
REGIONAL ECONOMIC INTEGRATION BLOCS FREE
The primary difference from the free trade area is that members agree to treat trade with nonmember countries in a similar manner. Barriers to trade are removed between member countries. This type provides for economic cooperation as in a free-trade zone. and Mexico are still free to set their own trade barriers on goods from other countries.Ģ. On the integration scale NAFTA, would be at about 2 since Canada, the U.S. For example, Canada, Mexico and the United States have formed the North American Free Trade Agreement (NAFTA), which reduces trade barriers between the three countries. Member countries remove all barriers to trade between themselves but are free to independently determine trade policies with nonmember nations. This is the most basic form of economic cooperation. There are four main types of regional economic integration.ġ. Trade barriers can be tariffs (taxes imposed on imports to a country), quotas (a limit to the amount of a product that can be imported) and border restrictions. The halfway stage, 5, represents the single market, or the completion of economic integration.Įconomic integration is the process by which different countries agree to remove trade barriers between them. We could also say that on the table below, 1-4 represents economic integration while 6-10 represents political integration. This means that the integrating states would actually become a new country - in other words, total integration. Ten would represent complete integration between two or more countries. We can describe integration as a scale, with 0 representing no integration at all between two or more countries. Regional integration usually begins with economic integration and as it continues, comes to include political integration. Usually integration involves one or more written agreements that describe the areas of cooperation in detail, as well as some coordinating bodies representing the countries involved. Regional integration is the process by which two or more nation-states agree to co-operate and work closely together to achieve peace, stability and wealth. Caribbean Elections - Understanding Regional Integration
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