economic integration Flashcards
types of economic integrations
- global integration
- bilateral agreement
- regional integration
what is global integration
agreements between countries in different geographical areas. more than 2 countries
what is bilateral agreement
2 countries trading together
what is regional integration
agreement between nations within same region
example of regional integration
NAFTA and EU
advantage of removing barriers with countries close to me
- lower transportation costs
- countries within same regional area tend to share similar tastes and preferences
what are the 5 levels of RTA’s
- free trade area
- customs union
- common market
- economic union
- political union
what is free trade area
no internal barriers but different external barriers
what is customs union
no internal barriers, and common external barriers
what is common market
no internal barriers, common external barriers, free flow of factors of production
what is economic union
no internal barriers, common external barriers, free flow of production, and having a single currency
what is political union
no internal barriers, common external barriers, free flow of factors of production, single common currency, and same president
real life example of political union
USA, it’s perceived as one nation, but each state has it’s own legal system and defense system
economic arguments for RTA’s
- increase economic growth
- increase effeciency because of access to factors of production
- economic stability because power is unity
political arguments for RTA’s
- political alliance
- political stability
- peace keeping
