Chapter 8 - Regional economic integration. In this chapter students will be able to: Describe the different levels of regional economic integration; understand the economic and political arguments for regional economic integration; understand the economic and political arguments against regional economic integration; explain the history, current scope, and future prospects of the world's most important regional economic agreements; understand the implications for business that are inherent in regional economic integration agreements. | Global Business Today 6e by Charles . Hill McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 8 Regional Economic Integration Introduction Regional economic integration refers to 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 Over the last two decades, the number of regional trade agreements has been on the rise Levels of Economic Integration There are five levels of economic integration Free trade area - all barriers to the trade of goods and services among member countries are removed, but members determine their own trade policies with regard to nonmembers Customs union - eliminates trade barriers between member countries and adopts a common external trade policy Common market - no barriers to trade between member countries, a common external trade policy, and the free movement of the factors of production Levels of Economic Integration Economic union - involves the free flow of products and factors of production between members, the adoption of a common external trade policy, and in addition, a common currency, harmonization of the member countries’ tax rates, and a common monetary and fiscal policy Political union - independent states are combined into a single union The Case for Regional Integration There are both economic and political arguments supporting regional economic integration Generally, many groups within a country oppose the notion of economic integration There are two main impediments to integration it can be costly - while a nation as a whole may benefit from a regional free trade agreement, certain groups may lose it can result in a loss of national sovereignty The Case Against Regional Integration Regional economic integration only makes sense when the amount of trade it creates exceeds the amount it . | Global Business Today 6e by Charles . Hill McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 8 Regional Economic Integration Introduction Regional economic integration refers to 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 Over the last two decades, the number of regional trade agreements has been on the rise Levels of Economic Integration There are five levels of economic integration Free trade area - all barriers to the trade of goods and services among member countries are removed, but members determine their own trade policies with regard to nonmembers Customs union - eliminates trade barriers between member countries and adopts a common external trade policy Common market - no barriers to trade between member countries, a common external .
