Chapter_08r1 - hapter Eight Regional Economic Integration...

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Chapter Eight Regional Economic Integration
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Introduction One notable trend in the global economy in recent years has been the accelerated movement toward regional economic integration Regional economic integration refers to agreements among countries in a geographic region to reduce, and ultimately remove, tariff and non-tariff barriers to enhance the free flow of goods, services,
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Levels of Economic Integration
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Levels of Economic Integration In a Free Trade Area all barriers to the trade of goods and services among member countries are removed A Customs Union eliminates trade barriers between member countries and adopts a common external trade policy
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Levels of Economic Integration An Economic Union involves the free flow of products and factors of production between member countries and the adoption of a common external trade policy, but it also requires a common currency, harmonization of members’ tax rates, and a common monetary and fiscal policy
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The Economic Case for Integration Stimulates economic growth in countries Increases FDI and world production Comparative Advantage Countries specialize in those goods and services efficiently produced Additional gains from free
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The Political Case for Integration Economic interdependence creates incentives for political cooperation
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Chapter_08r1 - hapter Eight Regional Economic Integration...

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