Economic_Integration_Supplement.pptx - REGIONAL ECONOMIC INTEGRATION The theory of economic integration refers to the policy of discriminately reducing

Economic_Integration_Supplement.pptx - REGIONAL ECONOMIC...

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The theory of economic integration refers to the policy of discriminately reducing or eliminating trade barriers among nations joining together. The degree of economic integration ranges from preferential trade arrangement (PTA) to free trade area (FTA) , customs union (CU) , common markets (CM) and economic unions . REGIONAL ECONOMIC INTEGRATION
Regional economic integration - agreements between countries in a geographic region to reduce tariff and non-tariff barriers to the free flow of goods, services, and factors of production between each other In theory, regional economic integration benefits all members
The degree of economic integration ranges from preferential trade arrangement (PTA) to free trade area (FTA) , customs union (CU) , common markets (CM) and economic unions .
The degree of economic integration ranges from preferential trade arrangement (PTA) to free trade area (FTA) , customs union (CU) , common markets (CM) and economic unions .
Preferential Trade Arrangements provide lower trade barriers among participating nations than on trade with non- members nations. This is the loosest form of economic integration.
Free Trade Area (FTA) – Is a form of economic integration wherein all trade barriers among member countries are removed. The goal of an FTA is to abolish all tariffs between member countries.
Customs Union – In addition to eliminating internal tariffs, member countries levy a common external tariff on goods being imported from non-members. In addition it harmonizes trade policies toward the rest of the world.
Common market – goes beyond a customs union by allowing free mobility of factors of production such as labor and capital. Labor is allowed to work in each and every member state. In the absence of such common market arrangements, workers would have to apply for visa, work permits etc. Requires significant harmony among members in fiscal, monetary, and employment policies
Economic Union – entails the creation of an even greater social and economic harmonization by adopting common economic policies e.g. unification of monetary and fiscal policies.

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