History
Economic Integration
Economic integration refers to the process of eliminating trade barriers and coordinating economic policies among different countries. This can involve the creation of a common market, a customs union, or a monetary union. The goal is to promote economic cooperation, increase efficiency, and foster economic growth among the participating nations.
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10 Key excerpts on "Economic Integration"
eBook - PDFEconomic Development Through Regional Trade
A Role for the New East African Community?
- K. Kimbugwe, N. Perkidis, M. Yeung, W. Kerr, Nicholas Perdikis(Authors)
- 2012(Publication Date)
- Palgrave Macmillan(Publisher)
2 Regional Trade and Economic Development 11 2.1 What is regional integration? Regional integration has many synonyms including economic integra- tion and economic cooperation, but is generally understood to be the coming together of countries, usually, but paradoxically, not always in the same region, 1 with the objective of reducing barriers to trade between members and in the process, spurring development and enhancing wel- fare in the region. Pelkmans (1984, p. 2) defines Economic Integration as ‘both a state of affairs and a process’. As a state of affairs, it refers to a fusion of separate national economies through various types of inte- gration. As a process, it signifies the gradual elimination of economic barriers between countries. Hine (1994) defines it as attempts by governments to link together the economies of two or more countries through the removal of economic barriers under spe- cific integration schemes. (p. 235) The World Bank’s (2000) comprehensive survey of trade blocs defines it as being about much more than reducing tariffs and quotas and explicitly includes the goal of removing other barriers that segment markets and impede the free flow of goods, services and factors of production. (p. 1) It further states: they have to be more outward looking instead of attempting to apply a ‘one suit fits all’ model to all countries. (p. 2) 12 Economic Development Through Regional Trade From the above discussion, regional integration can be defined along three dimensions. The first is geographic scope, which focuses on the number of countries involved in an arrangement (variable geometry) in which case the motivation to join may be political, economic, social or geographical. The second is coverage, that is, the sector(s) or activity(ies) involved (trade, labour mobility, macro-policies, sector policies, etc.).
eBook - PDFEuropean Responses to Globalization and Financial Market Integration
Perceptions of Economic and Monetary Union in Britain, France and Germany
- A. Verdun(Author)
- 2000(Publication Date)
- Palgrave Macmillan(Publisher)
In the 1960s Balassa emphasized that integration referred to both the process as well as the state of affairs, and that the absence of discrimination was cru- cial (Balassa, 1961: 1). Tinbergen referred to integration as being an ‘optimum’ of international economic cooperation (Tinbergen, 1965: 3), as well as the creation of an ‘optimum policy’ for participating countries (Tinbergen, 1965: 57). Apart from rather general objectives these early writers did not elaborate on why, how and, especially, at what cost, the larger economic region is beneficial to the participating economies. Economists have generally distinguished four forms or stages of eco- nomic integration: (i) free trade areas, in which the associated countries agree to remove the barriers to trade between them but all may have dif- ferent barriers to third countries; (ii) customs unions, in which a com- mon external tariff is decided upon vis-à-vis non-associated countries; (iii) common markets, which embody a customs union and allow capi- tal and people (labour) to move freely in the area; (iv) economic unions with centralized or harmonized decision-making concerning monetary, fiscal and other policy areas (cf. Robson, 1987: 2; Swann, 1988). Definitions of economic union The least well defined of the four forms of integration, and the one which is at the heart of the present study, is the economic union. In this stage, according to the different theories on international Economic Integration, the member countries have agreed to create a lasting integrated area, which ‘limits the unilateral use of certain instruments of economic policy’ (Robson, 1987: 2), or as Swann has defined it: ‘a common market in which there is also a complete unifi- cation of monetary and fiscal policy. The latter would be controlled by a central authority and in effect the member countries would become regions within the union’ (Swann, 1988: 12).
eBook - PDFThe Emergence of Greater China
The Economic Integration of Mainland China, Taiwan, and Hong Kong
- Y. Sung(Author)
- 2004(Publication Date)
- Palgrave Macmillan(Publisher)
3 Policy Changes and Economic Integration 41 Economic Integration In economic theory, Economic Integration means a lowering of the barriers to business between two economies. The barriers may be insti- tutional (for example, tariffs) or natural (for example, transportation costs). In the jargon of economics, Economic Integration may not imply a tightly knit relationship. For instance, it has often been said that the decrease in the cost of transportation has led to global Economic Integration. There are three different types of institutional barriers to international economic exchange: 1. Barriers to movement of goods, such as tariffs and quotas. 2. Barriers to movement of factors of production (labour and capital), such as controls on migration. 3. Transaction costs and risks arising from the use of different curren- cies. Such costs are significantly higher for countries that have strict foreign exchange controls. There are also natural barriers such as geographic and cultural dis- tances. Geographic and cultural affinities are often important in eco- nomic integration (for example, emergence of the CEA). Empirically, it has been estimated that, other things being equal, sharing a common linguistic tie is associated with a big (more than 250 per cent) increase in the bilateral FDI flow (Wei 1996:1). Many countries have entered into multilateral institutional agreements to promote Economic Integration. The most important among them has been the GATT (General Agreement on Tariffs and Trade), which was established after the Second World War to regulate international trade. At the Uruguay Round of trade negotiations con- cluded in December 1993, member countries decided to replace the GATT with the World Trade Organization (WTO) in 1995. The WTO oversees a comprehensive set of rules governing world commerce, covering not only trade in manufactures but also in services and agri- cultural products, and also rules on intellectual property protection.
eBook - PDF- Henk Jager, Catrinus Jepma(Authors)
- 2017(Publication Date)
- Red Globe Press(Publisher)
CHAPTER 10 Economic Integration 10.1 Introduction In recent decades, due to the removal of barriers and rapid developments in information technology, the world economy has experienced a substantial rise in levels of Economic Integration. As discussed in earlier chapters, this has affected the markets for goods and services, but also – and increasingly – those for capital and labour. In addition to this general trend towards globalization, there has been economic inte-gration on a more limited regional scale, as shown in the development of regional trade agreements (RTAs), such as the European Union (EU), North America Free Trade Agreement (NAFTA), Mercado Común del Sur (MERCOSUR), Association of Southeast Asian Nations (ASEAN) and Common Market for East and South Africa (COMESA). Following the creation of the World Trade Organization (WTO) in 1995 more than 130 RTAs have been closed, whereas in the pre-WTO (the General Agreement on Tariffs and Trade, GATT) period, from 1948 onwards, 124 RTAs had been concluded. Since the beginning of the 1990s some 462 RTAs have been reported to the GATT/WTO up to February 2010. In this chapter we will provide a background to Economic Integration and examine the main factors influencing Economic Integration and the forms that integration took. Glob-alization, for most people embodied by the WTO and the United Nations (UN) financial institutions, is seen as the main driver of Economic Integration and will be the subject of the first section of the chapter. The second part involves some theory of the forms of Economic Integration and will address the main issues by using the European Union (EU) as an example. 10.2 Globalization Globalization can be defined as the increase in international transactions in markets for goods, services, capital, and labour, combined with the growth and expanding scope of activities of many market players from all over the world and institutions that overlap national borders.
eBook - PDF- Dominick Salvatore(Author)
- 2014(Publication Date)
- Wiley(Publisher)
170 Part Three International Trade and Investment Relations 7.7 U.S. Free Trade Agreements and the North American Free Trade Agreement 7.8 Attempts at Economic Integration among Developing Countries Case Study 7-3 Economic Profile of Mercosur Case Study 7-4 Changes in Trade Patterns with Economic Integration 7.9 Economic Integration in Central and Eastern Europe and in the Former Soviet Republics Summary Review Questions and Problems Selected Bibliography INTERNet KEY TERMS Preferential trade arrangements Free trade area Customs union Common market Economic union Duty-free zones or free economic zones Trade creation Trade diversion Tariff factories European Union (EU) Variable import levies European Free Trade Association (EFTA) Trade deflection European Economic Area (EEA) North American Free Trade Agreement (NAFTA) Southern Common Market (Mercosur) Council of Mutual Economic Assistance (CMEA) or (COMECON) State trading companies Centrally planned economies Bilateral agreements Bulk purchasing Central and Eastern European Countries (CEEC) Newly Independent States (NIS) Commonwealth of Independent States (CIS) Central European Free Trade Association (CEFTA) Baltic Free Trade Area (BFTA) 7.1 INTRODUCTION In this chapter, we examine Economic Integration in general and customs unions in particular. The theory of Economic Integration refers to the commercial policy of discriminatively reducing or eliminating trade barriers only among the nations joining together. Chapter Seven Economic Integration 171 In Section 7.2 we examine the different forms of Economic Integration. Section 7.3 deals with static welfare effects of customs unions, while Preferential trade arrangements The loosest form of eco- nomic integration; provides lower bar- riers to trade among participating nations than on trade with nonparticipating nations. An example is the British Com- monwealth Prefer- ence Scheme. Section 7.4 examines the dynamic effects of customs unions.
eBook - PDFRegulating Trade in Services in the EU and the WTO
Trust, Distrust and Economic Integration
- Ioannis Lianos, Okeoghene Odudu(Authors)
- 2012(Publication Date)
- Cambridge University Press(Publisher)
1 Trust, distrust and Economic Integration: setting the stage ioannis lianos and johannes le blanc 1. Introduction The concept of integration, the dependent variable of this study, has received different interpretations by lawyers, political scientists and economists. Lawyers generally understand the concept as referring to ‘legal integration’, which is defined as ‘the gradual penetration’ of EU law ‘into the domestic law of its member states’. 1 Economists prefer the concept of ‘Economic Integration’, defined as ‘the elimination of economic frontiers between two or more economies’. 2 The removal of trade impediments between participating nations and ‘the establish- ment of certain elements of cooperation and coordination between them’ characterize the process of Economic Integration, as opposed to other forms of international cooperation. 3 Political scientists have been more reluctant to provide a ready-made definition of ‘integra- tion’ and have focused their analysis on the ‘political context in which integration occurs’, 4 the dependent variable being generally 1 A.-M. Burley and W. Mattli, ‘Europe Before the Court: A Political Theory of Legal Integration’, International Organization 47(1) (1993) 41–76, at 43. 2 J. Pelkmans, ‘The Institutional Economics of European Integration, in Integration Through Law: Europe and the American Federal Experience A General Introduction’, in M. Cappelletti, M. Seccombe and J. H. H. Weiler (eds.), Integration Through Law, Vol. 1, Methods, Tools and Institutions, Book 1, A Political, Legal and Economic Overview (Berlin: de Gruyter, 1986), p. 318. 3 A. M. El-Agraa, Regional Integration: Experience, Theory and Measurement, 2nd edn (Macmillan, 1999), p. 1. 4 W. Mattli, The Logic of Regional Integration – Europe and Beyond (Cambridge University Press, 1999), p. 19. 17 conceived in broad and descriptive terms as the transfer of authority to a supranational level.
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.
eBook - PDFRegional Integration
Choosing Plutocracy
- K. Hancock(Author)
- 2009(Publication Date)
- Palgrave Macmillan(Publisher)
Removing interstate barriers to trade poses fewer risks than also aligning external trade barriers, as required in a customs union. The double action of the customs union promises more significant, longer-term integration of economies than the single action of a free trade area. At the maxi- mum depth of Economic Integration, the states become a single eco- nomic unit. Full political integration may not be far behind. Why States Integrate To understand why states create different governance structures—the subject of this book—we first need to explain why states integrate at all. Given the political and economic risks of economically integrat- ing, particularly with the forms that require delegating policy making to supranational institutions or other states, why do state leaders ever choose formal integration over market-based trade in goods, services, and money? 26 R e g i o n a l I n t e g r at i o n Arguments for integration have traditionally focused on expected economic gains. In deciding whether to regionally integrate, a state considers several benefits derived from economic theories, some of which focus on gains from global trade and others on specific prefer- ential accords, such as free trade agreements and customs unions. 32 Many of the benefits suggested by economists are assumed to accrue to all members, regardless of their economic size relative to the other members, and from both global trade accords—specifically the WTO and the GATT before it—and regional trade accords.
- Clemens Kaupa(Author)
- 2016(Publication Date)
- Hart Publishing(Publisher)
The Treaty of Rome must therefore be conceptualized as a qualitatively distinct project from other forms of Economic Integration, which has been described as ‘economic union’. It was char-acterized by the ambition to integrate the European markets in all sectors on the basis of harmonized competitive conditions, which was supposed to help achieve the Community’s regulatory goals. THE COMMON MARKET WITHIN AN ‘ECONOMIC UNION’ In this section we take a closer look at the economic debate that informed the creation of one of the Treaty’s central projects, the establishment of a common market among the six Member States. It will be shown that the EEC was estab-lished in a phase when very diverse views on Economic Integration were discussed among policymakers and scholars, which all shaped the Treaty of Rome to dif-ferent degrees. The traditional understanding of economic relations between states had been informed by what is often called ‘orthodox’ or ‘standard’ trade theory, which draws from Ricardo’s concept of ‘comparative advantage’. The cen-tral concern of orthodox trade theory was to show that tariffs and quantitative restrictions distorted trade flows, and thereby prevented the optimum division of labour between trading countries. After the war, orthodox trade theory provided 32 Interpreting the Treaty in its Historical Context I: The Treaty of Rome 86 See for example Solow, who argued that ‘[g]rowth theory, like much else in macroeconomics, was a product of the depression of the 1930s and of the war that finally ended it’. Robert Solow, ‘Growth theory and after’ (1988) 78 American Economic Review 307, 308. 87 For a traditional treatment of the gains from the division of labour, see for example Röpke (n 30), 66–69, 226–31. 88 Milward (n 61), 107. 89 Jacob Viner, The Customs Union Issue (Carnegie Endowment for International Peace, 1950) 43–45. the intellectual backbone of early trade liberalization.
eBook - PDF- Athina Zervoyianni, George Argiros, George Agiomirgianakis(Authors)
- 2017(Publication Date)
- Red Globe Press(Publisher)
58 EUROPEAN INTEGRATION union as a whole. In EUs in addition to monetary integration there is also cooperation in the fiscal-policy front as well as in other areas of economic policy, including employment and social security policy. In the case of political integration the participating countries operate much like a single economy: in addition to a common currency and a central monetary authority, there is centralization of national budgets as well as a common fiscal authority that is accountable to a central Parliament. What makes countries want to participate in integration agree-ments? Integration agreements are sometimes proposed for political reasons. But participating countries also seek to achieve economic gains. Such gains may be derived from: • an increase in trade flows according to comparative advantage; • the larger size of the market and the exploitation of scale economies; • improvement of member states’ terms-of-trade with the rest of the world; • an increase in the intensity of competition among firms; • reduced production costs due to integration-induced technological advances • a more efficient allocation of factors of production within the integrated area; • a higher rate if investment and thus economic growth; • reduction of transaction costs in money and capital markets and elimination of exchange-rate uncertainty and risk; and • elimination of externalities arising from international macroeco-nomic interdependence. In what follows we examine the benefits for member countries to be derived from the formation of customs unions. We start in the following section with an analysis of free-trade equilibrium and the effects of uniform tariffs, and then consider the trade and welfare effects of customs unions, examining both the conventional static CU theory and the dynamic effects of CUs.
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