Economic integration
1) Give some examples of economic integration, today and in the past.
Although there exists more than 500 free trade agreements in some shape or from worldwide, I contemplate two of the major ones when addressed with this question. Namely EU and NAFTA.
EU also known as the European Union formerly known as the European Community has a long and rich history that I will not go into detail about here. I will however note that it was a result of two world wars there left the independent countries poor, both in population and economic terms. Although an imperfect one, the EU is at stage 4 in our 5 stages of integration, economic integration. This means that they have abolished most tariffs among members, adopted identical external tariffs, they have deregulated the free flow of labor and capital between the members and they have adopted the same currency, namely the euro. What I meant by calling the EU an imperfect economic integration was that not all 27-member countries share the currency. The biggest loser for the euro has to be Britain. Britain and other countries whom decided to stay out of the euro has formed ERFA.
NAFTA also known as the North American Free Trade Agreement consists of Canada, U.S.A, and Mexico. As the name infers this agreement rests on the first stage of integration in our model.
Agreements that might be very important in the future could be agreements such as the FTAA, ASEAN, APEC and the EAC. Notably the latter could grow to substantial importance if it succeeds in establishing more democratic stability within this highly volatile region.
2) What are the advantages of economic integration?
Trade Creation: Member countries have a wider selection of goods and services not previously available. They can acquire goods and services at a lower cost after trade barriers due to lowered tariffs or removal of tariffs. More trade is encouraged between member countries as the balance of money generated from cheaper goods and services can be used to buy
Although there exists more than 500 free trade agreements in some shape or from worldwide, I contemplate two of the major ones when addressed with this question. Namely EU and NAFTA.
EU also known as the European Union formerly known as the European Community has a long and rich history that I will not go into detail about here. I will however note that it was a result of two world wars there left the independent countries poor, both in population and economic terms. Although an imperfect one, the EU is at stage 4 in our 5 stages of integration, economic integration. This means that they have abolished most tariffs among members, adopted identical external tariffs, they have deregulated the free flow of labor and capital between the members and they have adopted the same currency, namely the euro. What I meant by calling the EU an imperfect economic integration was that not all 27-member countries share the currency. The biggest loser for the euro has to be Britain. Britain and other countries whom decided to stay out of the euro has formed ERFA.
NAFTA also known as the North American Free Trade Agreement consists of Canada, U.S.A, and Mexico. As the name infers this agreement rests on the first stage of integration in our model.
Agreements that might be very important in the future could be agreements such as the FTAA, ASEAN, APEC and the EAC. Notably the latter could grow to substantial importance if it succeeds in establishing more democratic stability within this highly volatile region.
2) What are the advantages of economic integration?
Trade Creation: Member countries have a wider selection of goods and services not previously available. They can acquire goods and services at a lower cost after trade barriers due to lowered tariffs or removal of tariffs. More trade is encouraged between member countries as the balance of money generated from cheaper goods and services can be used to buy