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Economic Integration orEconomic Integration or
Regional IntegrationRegional Integration
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Type of regionalizationType of regionalizationtage of Integration
ree trade areaustoms union
ommon market
conomic union
Abolition of Tariffs and Quotas among Members
YES
YES
YES
YES
Source: F.R. Root, 1992Source: F.R. Root, 1992
Common Tariffs and Quotas System
NO
YES
YES
YES
Abolition of Restrictions on Factor Movement
NO
NO
YES
YES
Harmoni-zation and Unification of Econo
NO
NO
NO
YES
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Levels of Economic IntegrationLevels of Economic Integration
Free-trade Area remove bilateral barriers to trade
Customs Unionset common trade barriers
Common Marketfree mobility of workers and capital
Economic Unioncommon fiscal and monetary policies
Increasing
Integ
ration
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Hierarchy of Economic IntegrationHierarchy of Economic Integration
Source: Nelson (1999:224)
Give upleast sovereignty
Give upmore sovereignty
Give upmost sovereignty
EFTANAFTALAFTA
BENELUX
EC(Pre-1999)
EU(Post-1999)
USACanadaEx-Soviet Union (CIS)
Shared,Free Zone
Free TradeArea
CustomsUnion
CustomsMarket
EconomicUnion
PoliticalUnion
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Benefit of regional integrationBenefit of regional integration
Economic benefits:
Greater world production because free trade allows countries
to specialize in the production (economies of scale)
Economic growth because of FDI (technology, marketing,
managerial know transferred)
Protected markets are opened
Political benefits:
Reduce the risk political conflict between neighboring
countries
Increase the political weight in the world.
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Cost of regional integrationCost of regional integration Impediments to integration and cost:
Painful adjustment for some countries
Less national sovereignty Cost (trade diversion) might outweigh the benefit (trade
creation)
More price competition
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Key Economic Blocs
European Union(EU)
North AmericaFree TradeAgreement(NAFTA)
Southern AmericaCommon Market(MERCOSUR)
ASEAN FreeTrade Agreement(AFTA)
Africa, Caribbeanand the Pacific(ACP)
Gulf CooperationCouncil (GCC)
http://www.tuscanyvalley.net/root/img/mercosur.jpghttp://www.tuscanyvalley.net/root/img/mercosur.jpghttp://www.tuscanyvalley.net/root/img/mercosur.jpghttp://images.google.com/imgres?imgurl=www.ocsc.go.th/asean/images/asean.jpg&imgrefurl=http://www.ocsc.go.th/asean/page1.html&h=145&w=146&prev=/images?q=ASEAN&svnum=10&hl=en&lr=&ie=UTF-8&oe=UTF-8http://images.google.com/imgres?imgurl=www.ocsc.go.th/asean/images/asean.jpg&imgrefurl=http://www.ocsc.go.th/asean/page1.html&h=145&w=146&prev=/images?q=ASEAN&svnum=10&hl=en&lr=&ie=UTF-8&oe=UTF-8http://images.google.com/imgres?imgurl=www.globalsecurity.org/military/world/gulf/images/gcc.gif&imgrefurl=http://www.globalsecurity.org/military/world/gulf/&h=133&w=155&prev=/images?q=Gulf+Cooperation+Council&start=20&svnum=10&hl=en&lr=&ie=UTF-8&oe=UTF-8&sa=Nhttp://images.google.com/imgres?imgurl=www.mnhn.fr/colparsyst/eu.gif&imgrefurl=http://www.mnhn.fr/colparsyst/&h=417&w=635&prev=/images?q=EU&svnum=10&hl=en&lr=&ie=UTF-8&oe=UTF-8http://images.google.com/imgres?imgurl=mindprod.com/images/nafta.gif&imgrefurl=http://mindprod.com/economics.html&h=209&w=250&prev=/images?q=NAFTA&svnum=10&hl=en&lr=&ie=UTF-8&oe=UTF-8http://images.google.com/imgres?imgurl=www.ocsc.go.th/asean/images/asean.jpg&imgrefurl=http://www.ocsc.go.th/asean/page1.html&h=145&w=146&prev=/images?q=ASEAN&svnum=10&hl=en&lr=&ie=UTF-8&oe=UTF-8http://www.tuscanyvalley.net/root/img/mercosur.jpg8/8/2019 04 Economic Integration
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Regional Economic IntegrationRegional Economic Integration
European Union (EU)
Members: 15 (+5)
Population: 377 mil.
GDP: US$ 7,884 bil.
GDP/head: US$ 20,889
Total trade: US$ 4,568 bil.
2001
1957, Euro (2002)
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EU EvolutionEU Evolution
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Regional Economic IntegrationRegional Economic Integration
N. America Free-TradeAgreement (NAFTA)
Members: 3
Population: 414
GNP: US$ 11,466 bil.
GDP/head: US$ 27,670
Total trade: US$ 2,865 bil.
2001
1989
http://images.google.com/imgres?imgurl=mindprod.com/images/nafta.gif&imgrefurl=http://mindprod.com/economics.html&h=209&w=250&prev=/images?q=NAFTA&svnum=10&hl=en&lr=&ie=UTF-8&oe=UTF-8http://images.google.com/imgres?imgurl=beleneserv.uctbel.udg.mx/alumnos/cucea_drive/archivos/NAFTA.jpg&imgrefurl=http://beleneserv.uctbel.udg.mx/alumnos/cucea_drive/lista.php&h=436&w=600&prev=/images?q=NAFTA&start=40&svnum=10&hl=en&lr=&ie=UTF-8&oe=UTF-8&sa=N8/8/2019 04 Economic Integration
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Regional Economic IntegrationRegional Economic Integration
ASEAN Free-Trade Area(AFTA)
Members: 10
Population: 526 mil.
GDP: 555 $ bil.
GDP/head: 1,164$
Total trade: US$ 781 bil.
2001
1967, AFTA (1993)
http://images.google.com/imgres?imgurl=www.ocsc.go.th/asean/images/asean.jpg&imgrefurl=http://www.ocsc.go.th/asean/page1.html&h=145&w=146&prev=/images?q=ASEAN&svnum=10&hl=en&lr=&ie=UTF-8&oe=UTF-8http://images.google.com/imgres?imgurl=www.fas.usda.gov/info/agexporter/1999/asean.2.gif&imgrefurl=http://www.fas.usda.gov/info/agexporter/1999/asean.html&h=322&w=358&prev=/images?q=ASEAN&svnum=10&hl=en&lr=&ie=UTF-8&oe=UTF-88/8/2019 04 Economic Integration
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ASEAN vs EAST ASIAASEAN vs EAST ASIA
Source: IMF, Direction of Trade Statistics Yearbook2001
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ASEAN TradeASEAN Trade
Source: IMF, Direction of Trade Statistics Yearbook2001
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ASEAN Trading PartnersASEAN Trading Partners
Source: IMF, Direction of Trade Statistics Yearbook2001
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Regional Economic IntegrationRegional Economic Integration
MERCOSUR
Members: 4 (A, P, U, B)
Population: 219 mil.
GDP: US$ 797
GDP/head: US$ 3,637
Total trade: US$ 174 bil.
2001
1991
http://images.google.com/imgres?imgurl=www.cmq.edu.mx/cmqmercosur/images/mercosur.jpg&imgrefurl=http://www.cmq.edu.mx/cmqmercosur/default.htm&h=836&w=653&prev=/images?q=Mercosur&svnum=10&hl=en&lr=&ie=UTF-8&oe=UTF-8http://www.tuscanyvalley.net/root/img/mercosur.jpgTop Related