Econ Integration

Question 1

What is economic integration

Answer 1

2+ countries are economically integrated if there are NO barriers or restrictions on trade, investment + migration between them

Question 2

In economically integrated countries market prices should be?

Answer 2

Market prices should be similar and should converge, with small differences due to trade costs

Question 3

What is negative integration?

Answer 3

Removal of barriers e.g. tariffs

Question 4

What is positive integration?

Answer 4

Coordinating or harmonising government policies like banking regulations

Question 5

What is a restriction on movement of goods?

Answer 5

Customs duties

Question 6

What is a restriction on migration?

Answer 6

Visa or work permit

Question 7

Name some economic borders

Answer 7

Restrictions on movements of goods
Restrictions on migration
Restrictions on international investments
Controls on financial flows

Question 8

What is the for argument for removing barriers across countries?

Answer 8

Essentially the same as an argument for bigger markets

• increased competition
• specialisation
• economies of scale better used
• wider consumer choice

Question 9

What is international policy harmonisation?

Answer 9

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

Question 10

What are the impacts of national economic policies on other countries called

Answer 10

Spillovers

Government may ignore these third party affects. But this non cooperation is economically inefficient

Question 11

What does international cooperation invoke that could be an argument for brexit?

Answer 11

Loss of national sovereignty

But gains from cooperation are likely to be greater as international economic interdependence increase e.g through trade

Question 12

What are examples of regional integration

Answer 12

EU, USCMA

Question 13

How do governments attempt to support global integration?

Answer 13

Through global instructions like the WTO

Question 14

Advantages and disadvantages of global institutions?

Answer 14

+ avoid discrimination
+ have a wider impact
- slower to act due to diversity of views

Question 15

Regional integrations pros and cons)

Answer 15

+ quicker
+ deeper integration as members are more similar
- damaging discrimination

Question 16

What are the three global institutions for economic integration?

Answer 16

World trade organisation
International Monetary Fund
World bank

Question 17

What does the WTO do?

Answer 17

1. Set rules for world trade - enforceable through dispute settlement system
2. Periodic negotiations to reduce trade barriers

Question 18

What does IMF do?

Answer 18

1. exchange rates stability & short term capital flows

Question 19

What does world bank deal with?

Answer 19

• long term capital flows

Question 20

Success of GATT/WTO?

Answer 20

Success in reducing trade barriers & establishing a body of rules with dispute settlement body

Question 21

What are the regional integration stages (baladas 1961)

Answer 21

1. FTA (tariffs and quotas abolished on internal area origin trade but members keep national outside tariffs)
2. Customs union (tariffs abolished on all internal trade + CET)
3. Common market (Customs union but without restrictions on factor movements)
4. Economic union (Commons market but with some harmonisation of national policies)

Question 22

What is the critique of balassa 1961

Answer 22

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

Question 23

What is driving world economies to become increasingly interdependent?

Answer 23

1. Globalisation through global institutes
2. Governments who are prepared to give up national sovereignty for economic & political benefits