Chapter 8

Question 1

Levels of Economic Integration

Answer 1

1. Free Trade Area
2. Customs Union
3. Common Market
4. Economic Union
5. Political Union

Question 2

Free Trade Area

Answer 2

no trade barriers

Question 3

Customs Union

Answer 3

no trade barriers + common external trade policy

Question 4

Common Market

Answer 4

no trade barriers + common external trade policy + factors of production move freely among members.

Question 5

Economic Union

Answer 5

all the above + harmonization of tax rates

Question 6

Political Union

Answer 6

a central political apparatus that coordinates economic, social, and foreign policy.

Question 7

Economic Case for Integration

Answer 7

seen as attempt to achieve additional gains from the free flow of trade and investment between countries beyond those attainable under global agreements such as the WTO

Question 8

Political Case for Integration

Answer 8

linking neighbouring economies and making them increasingly dependent on each other creates incentives for political cooperation between neighbouring states and reduces potential for violent conflict.

Question 9

Impediments to Integration

Answer 9

1. Economic integration benefits the majority, BUT it has costs. (painful adjustments, good for the whole but costly for some).
2. Concerns over National Sovereignty