Econ Integration Flashcards
(23 cards)
What is economic integration
2+ countries are economically integrated if there are NO barriers or restrictions on trade, investment + migration between them
In economically integrated countries market prices should be?
Market prices should be similar and should converge, with small differences due to trade costs
What is negative integration?
Removal of barriers e.g. tariffs
What is positive integration?
Coordinating or harmonising government policies like banking regulations
What is a restriction on movement of goods?
Customs duties
What is a restriction on migration?
Visa or work permit
Name some economic borders
Restrictions on movements of goods
Restrictions on migration
Restrictions on international investments
Controls on financial flows
What is the for argument for removing barriers across countries?
Essentially the same as an argument for bigger markets
- increased competition
- specialisation
- economies of scale better used
- wider consumer choice
What is international policy harmonisation?
International policy harmonisation refers to the process of aligning or coordinating policies and regulations among different countries or international entities to create consistency, compatibility Etc in approaches to various issues
What are the impacts of national economic policies on other countries called
Spillovers
Government may ignore these third party affects. But this non cooperation is economically inefficient
What does international cooperation invoke that could be an argument for brexit?
Loss of national sovereignty
But gains from cooperation are likely to be greater as international economic interdependence increase e.g through trade
What are examples of regional integration
EU, USCMA
How do governments attempt to support global integration?
Through global instructions like the WTO
Advantages and disadvantages of global institutions?
+ avoid discrimination
+ have a wider impact
- slower to act due to diversity of views
Regional integrations pros and cons)
+ quicker
+ deeper integration as members are more similar
- damaging discrimination
What are the three global institutions for economic integration?
World trade organisation
International Monetary Fund
World bank
What does the WTO do?
- Set rules for world trade - enforceable through dispute settlement system
- Periodic negotiations to reduce trade barriers
What does IMF do?
- exchange rates stability & short term capital flows
What does world bank deal with?
- long term capital flows
Success of GATT/WTO?
Success in reducing trade barriers & establishing a body of rules with dispute settlement body
What are the regional integration stages (baladas 1961)
- FTA (tariffs and quotas abolished on internal area origin trade but members keep national outside tariffs)
- Customs union (tariffs abolished on all internal trade + CET)
- Common market (Customs union but without restrictions on factor movements)
- Economic union (Commons market but with some harmonisation of national policies)
What is the critique of balassa 1961
Useful starting point but there isn’t necessarily a progression from A->D
e.g. the EU started as a customs union not a FTA.
Also, in PRACTICE, CU/FTA/CM need some policy harmonisation
What is driving world economies to become increasingly interdependent?
- Globalisation through global institutes
- Governments who are prepared to give up national sovereignty for economic & political benefits
