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Unit 2: Module 3: Topic 4: Economic Integration

This document discusses economic integration, which involves countries coming together to increase economic linkages. There are different types of economic integration including free trade areas, customs unions, common markets, and economic unions. A free trade area eliminates tariffs between members but each country sets its own external tariffs. A customs union has a common external tariff in addition to free trade. A common market includes free movement of labor and capital. Economic unions involve harmonized macroeconomic policies and potentially a single currency. The benefits of integration include free trade, lower barriers, and economic growth, while the costs can include loss of sovereignty and jobs. The objectives of Caribbean integration are improved living standards, coordinated development, and removal of trade barriers.

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Ronaldo Taylor
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105 views10 pages

Unit 2: Module 3: Topic 4: Economic Integration

This document discusses economic integration, which involves countries coming together to increase economic linkages. There are different types of economic integration including free trade areas, customs unions, common markets, and economic unions. A free trade area eliminates tariffs between members but each country sets its own external tariffs. A customs union has a common external tariff in addition to free trade. A common market includes free movement of labor and capital. Economic unions involve harmonized macroeconomic policies and potentially a single currency. The benefits of integration include free trade, lower barriers, and economic growth, while the costs can include loss of sovereignty and jobs. The objectives of Caribbean integration are improved living standards, coordinated development, and removal of trade barriers.

Uploaded by

Ronaldo Taylor
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

UNIT 2: MODULE 3

Topic 4: Economic Integration


ECONOMIC INTEGRATION
Economic integration is defined as the
coming together of countries with the goal of
increasing economic linkages among the
group vis-a-vis the rest of the world.
Types of Economic Integration
Free trade area

Customs Union

Common Market

Economic Union
Free Trade Area
This is a regional agreement that allows for the
elimination of tariffs (tariff free trade) among
member countries, while allowing each
member the freedom to levy its own trade
restrictions on imports from other countries,
that is, each country maintains its own tariff
arrangements with other countries.

Examples of free trade areas: FTAA, NAFTA,


LAFTA.
Customs Union
This is a free trade area plus an agreement to establish
common barriers to trade with the rest of the world.

A customs union is formed when the countries in a free


trade area implement a common external tariff (CET)
for its members. This means that all good from non
member countries coming into the region will
command the same tariff rate as to which member
country it comes in.

Examples of customs union: ASEAN


Common Market
A common market is formed when the
members of a customs union agree to free
labour and capital mobility.

A common market is a customs union that also


has free movement of labour and capital among
its members.

Examples: CARICOM, CSME


Economic Unions
This type of union involves the harmonisation
and coordination of macroeconomic policy.

There may be the subsequent loss of economic


sovereignty (centralised control of economic
policy).

In its strongest form, there is a single currency


and exchange rate as in the case of the
eurozone.
Benefits of Economic Integration
Free trade within the group

Lower or no barriers within the group

Welfare gains trade creation

Higher economic growth


Costs/Disadvantages of
Economic Integration
Loss of sovereignty

Brain Drain

Loss of jobs

Welfare loss trade diversion


Objectives of Caribbean Integration
Improved standards of living and work

Accelerated, coordinated and sustained economic development and convergence.

Removal of differences and restrictions/barriers to trade among CARICOM


countries

Free movement of regional services, goods, capital and people

Full employment of labour and other factors of production

Enhanced levels of international competitiveness

Expansion of trade and economic relations with third states

Organization for increased production and productivity.

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