Week 9 Flashcards
What is regional economic integration
When countries come together to create free trade areas so that they can have trade access to each others market
What are the regional trade blocks
Formed to reduce barriers of trade and promote economic integration in member countries
What are the levels of economic integration
- Free Trade area
- Customs unions
- Common market
- Economic Union
- Political union
What is the free trade area
Countries that freely trade with each other
What is a customs union
Countries form common policies and tariffs among most or all of their imports and exports and transiting goods.
What are common market
you have free trade, common external trade policy and the labour, investment can be moved around in that area
What is the economic union
Freetrade, common external trade, investment, labour and capital is moving, there’s one currency
What is the political union
Joining countries to become under one government
What is economic case for integration?
Stimulates economic growth, increases FDI and world production, countries specializes in those goods and services they efficiently product
What are political case for integration
Reduces violent confrontation, countries have more economic clout to enhance trade with other countries or trading blocks
What are the problems to integration?
- Integration is hard to achieve and sustain, countries lose freedom and sovereignty
- Not all nations will benefit
- Not all nations will be efficient
Why is it not good to have a regional trade block?
The benefits of integration will benefit the world only if the amount of trade creates exceeds the amount of trade it diverts
What is trade creation
When a trade agreement stimulates additional trade between member countries, leading to improved economic efficiency, increased market access and enhanced consumer choices
Trade diversion
It is a draw back and is when trade patterns leads to less efficient allocation of resources resulting in higher costs for consumers, less quality products or loss of economic efficiency.
What is the regional economic integration in Europe
This is when 27 countries in Europe agreed on economic cooperation and integration within the European continent resulting to the European Union
What is the European Union
Seen as the emerging power with 27 members
What is the European Free Trade Association
- Oldest free trade association that didn’t take part of the EU
- Has only four members
Who is apart of the european free trade association?
Linkenstine, Iceland, Norway, Switzerland