Economic Integration

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Economic Integration

Summary of Economic Integration

The process of unifying two or more national economies through conscious coordination of trade, fiscal, and monetary activities. Economic integration is normally preceded by the reduction or abolition of tariffs, quotas, and similar constraints upon trade among the integrating nations. Following liberalization of trade, the participating governments usually minimize impediments to the flow of labor and capital, coordinate taxation and public spending, and perhaps establish a uniform currency, or at least institutionalize cooperation among central banks so as to assure stability of member countries’ currencies relative to one another. The highest form of economic integration is manifested in an economic community, in which a central government or supranational authority oversees trade policy with nonmember states and coordinates other significant economic activity. The economic community serves as the precursor to full political integration. Lesser forms of economic integration are the free trade area, common Market, and Customs Union (qq.V.).

(Main Author: William J. Miller)

Economic Integration in International Trade

Meaning of Economic Integration, according to the Dictionary of International Trade (Global Negotiator): Economic integration has been one of the main economic developments affecting international trade in the last years. Countries have wanted to engage in economic cooperation to use their respective resources more effectively and to provide large markets for member-countries of the resulting integrated areas. There are mainly four levels of economic integration:

Free trade area: is the least restrictive and loosest form of economic integration among nations. In a free trade area all barriers to trade among members countries are removed. Each member country maintains its own trade barriers vis-à-vis con-member countries.

Customs union: is one step further in the economic integration process. As in the free trade area, goods and services are freely traded among members. In addition, however, the customs union establishes a common trade policy with respect to non-members. Typically this takes the form of a common external tariff, whereby imports from non-member are subject to the same tariff when sold to any member country.

Common market. The common market has the same features as a customs union, but, in addition, factors of production (labour, capital and technology) are mobile among members. Restrictions on immigration and cross-border investment are abolished.

Economic union: it is the last step in an economic integration process. In addition to free movement of goods, services and production factors, it also requires integration of economic policies, both monetary and fiscal. Under an economic union members harmonize monetary policies, taxation and government spending. In addition, a common currency is used by members and this could involve a system of fixed exchange rates.

Economic Integration

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Economic Integration

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Hierarchical Display of Economic integration

Economics > Economic policy > Economic policy
Trade > Tariff policy > Tariff policy > Free-trade area
International Relations > Cooperation policy > Cooperation policy > Economic cooperation
European Union > European construction > Deepening of the European Union > European integration
Economics > Regions and regional policy > Regional policy > Regional integration
Economics > Economic structure > Economic system > Economic union
Trade > Tariff policy > Tariff policy > Customs union
Economics > Economic conditions > Economic development > Integrated development
Finance > Monetary relations > Monetary relations > Monetary integration

Economic integration

Concept of Economic integration

See the dictionary definition of Economic integration.

Characteristics of Economic integration

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Translation of Economic integration

Thesaurus of Economic integration

Economics > Economic policy > Economic policy > Economic integration
Trade > Tariff policy > Tariff policy > Free-trade area > Economic integration
International Relations > Cooperation policy > Cooperation policy > Economic cooperation > Economic integration
European Union > European construction > Deepening of the European Union > European integration > Economic integration
Economics > Regions and regional policy > Regional policy > Regional integration > Economic integration
Economics > Economic structure > Economic system > Economic union > Economic integration
Trade > Tariff policy > Tariff policy > Customs union > Economic integration
Economics > Economic conditions > Economic development > Integrated development > Economic integration
Finance > Monetary relations > Monetary relations > Monetary integration > Economic integration

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