Economics
Market Integration
Market integration refers to the process of combining separate markets into a single, unified market. This can involve the removal of trade barriers, harmonization of regulations, and increased coordination among market participants. The goal is to create a more efficient and interconnected market, leading to increased competition, lower prices, and greater economic opportunities for businesses and consumers.
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3 Key excerpts on "Market Integration"
- Thomas P. Lyons(Author)
- 2019(Publication Date)
- Columbia University Press(Publisher)
Economic integration pertains to the pattern of eco-nomic activity, not to the economic system with which a certain pattern is associated. 5 In particular, economic integration must be carefully distinguished from centralization, which pertains THE CONCEPT OF ECONOMIC INTEGRATION 11 to the allocation of decision-making authority or of command over information—not to the pattern of economic activity itself. In general, there is no necessary relationship between centrali-zation and integration; a market economy is highly decentralized, but this decentralization does not imply that a market economy is not integrated. Economic integration must also be distin-guished from various forms of organizational integration. China, for example, has experimented with industrial corporations and joint enterprises, each of which brings several producers under a common management. 6 Such arrangements may or may not promote specialization and cooperation among the producers within corporations (and among the corporations themselves). Finally, economic integration does not necessarily entail political and cultural conformity, or unity of purpose; for example, re-gionalism is not necessarily an indication of economic fragmen-tation among the various regions in question. B. Significance Economic integration has been a central theme in explanations of economic development since at least the time of Adam Smith, whose interpretation of the growth process rested upon a per-ception of increasing interdependence (the progressive division of labor) and its causal role in the wealth of nations. The study of various forms of cooperation and their importance for the efficient allocation of scarce resources constituted a substantial portion of classical economics. More recent analyses have further elaborated the potential single-period benefits from integration and explored its intertemporal effects upon the accumulation of physical capital, acquisition of skills, and diffusion of technology.
eBook - ePub- Peter Robson(Author)
- 2002(Publication Date)
- Routledge(Publisher)
7 THE NEW ECONOMICS OF Market Integration
The orthodox theory of customs unions demonstrates that integration can provide expanded opportunities for countries to engage in inter-industry specialization within a bloc, in accordance with comparative advantage, thus bringing about a rationalization of its production. As long as the benefits from rationalization in the form of trade creation are not outweighed by reduced specialization brought about by trade diversion between the bloc and the rest of the world, as a result of the bloc’s discriminatory common external tariff, resource allocation will be improved. By that means a once-and-for all increase in the income and welfare of the member states as a whole may be brought about. The theory assumes a perfectly competitive framework in which homogeneous products are produced by firms that lack market power and incur few or no transaction costs. The core theory—customs union analysis—also excludes inter-country factor mobility.Although comparative advantage has always been a key concept in integration analysis, the thrust of much recent analytical and empirical work has been to question its relevance to contemporary trade and regional integration. The new emphasis has been prompted in part by the inability of the orthodox theory—even when scale economies are incorporated—to explain intra-industry trade in similar products. Yet a large part of modern world trade is made up of such trade. Indeed, much of the increase in intra-bloc trade in manufactures that took place following the establishment of the EC took that form and it has become a major component of trade in manufactures. New theories of trade have been developed which are capable of explaining this trade. As already noted, one explanation centred on the interaction of scale economies and product differentation (Krugman, 1979; Dixit and Norman, 1980). The other explanation turned on imperfect competition and the incentives it affords for engaging in active policies of market segmentation (Brander and Krugman, 1983). Both developments were responsible for a marked change in thinking about the gains from international trade and those from regional economic integration that became apparent from the middle of the 1980s.
eBook - PDFThe Segmentation of Europe
Convergence or Divergence between Core and Periphery?
- Mark Baimbridge, Ioannis Litsios, Karen Jackson, Uih Ran Lee(Authors)
- 2017(Publication Date)
- Palgrave Macmillan(Publisher)
Part I The Economics of Integration and Policy 37 © The Author(s) 2017 M. Baimbridge et al., The Segmentation of Europe, DOI 10.1057/978-1-137-59013-8_2 2 Theoretical Foundations of European Economic Integration Introduction This chapter discusses the economic theories underpinning the applied areas examined in further chapters. In particular, it reviews economic thinking in terms of the key aspects of international trade, such as cus- toms union theory and the development of a single internal market (SIM) regarding the free movement of factors of production, that have driven the post–World War II (WWII) agenda of regional trade agree- ments across Europe. Additionally, to complete the move from ‘shallow’ to ‘deep’ regional economic integration, the European Union (EU) has moved to a monetary union, bringing to the fore the theory of optimum currency areas (OCAs). However, the emphasis of this chapter on how these paths of economic integration have come under pressure so it is increasingly evident that not all members of either trade arrangements or the eurozone benefit equally, or indeed at all. Furthermore, the impact of the global financial crisis and Great Recession indicates that these struc- tures frequently offer less protection from shocks than previously thought. Consequently, most academic social science literature either accepts that closer economic integration is desirable or, more usually, given the political will of leaders, that it is inevitable. Therefore economists, political 38 scientists and sociologists frequently devote their research to the dynam- ics of European economic integration in its varying dimensions, the political institutions fostering an ‘ever closer union’ and the social impli- cations of these momentous changes.
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