International
Economic Integration
Economic integration is an arrangement
among nations that typically includes the
reduction or elimination of trade barriers
and the coordination of monetary and
fiscal policies. Economic integration aims
to reduce costs for both consumers and
producers and to increase trade between
the countries involved in the agreement.
Sometimes referred to as regional
integration as it often occurs among
neighboring nations.
Regional economic integration
has enabled countries to focus on
issues that are relevant to their
stage of development as well as
encourage trade between
neighbors.
Regional integration is a process
in which states enter into a
regional agreement in order to
enhance regional cooperation
through regional institutions and
rules
Regional integration is a process in which
states enter into a regional agreement in
order to enhance regional cooperation
through regional institutions and rules.
Regional integration has been organized
either via supranational institutional
structures or through intergovernmental
decision-making, or a combination of
both.
A trade bloc is a type of intergovernmental agreement, often part of a regional
intergovernmental organization, where regional barriers to trade, (tariffs and non-
tariff barriers) are reduced or eliminated among the participating states.
A trade bloc is basically a free-trade zone, Trading blocs are a form of
or near-free-trade zone, formed by one or economic integration, and
increasingly shape the pattern of
more tax, tariff, and trade agreements
world trade.
between two or more countries
REGIONAL TRADING BLOCS
A regional trading bloc is a group of countries
within a geographical region that protect
themselves from imports from non-members.
Regional trade blocs promote trade within the bloc
and defend its members against global
competition. Defense against global competition is
obtained through established tariffs on goods
produced by member states, import quotas,
government subsidies, onerous bureaucratic import
processes, and technical and other non-tariff
barriers
TYPES OF REGIONAL TRADING BLOCS
Trade blocs can be stand-alone agreements between
several states (such as the North American Free
Trade Agreement (NAFTA) or part of a regional
organization (such as the European Union).
Depending on the level of economic integration,
trade blocs can fall into six different categories,
such as preferential trading areas, free trade areas,
customs unions, common markets, economic union
and monetary unions , and political union .
Preferential trade arrangements (PTAs)
This is the term used in the WTO for trade preferences, such
as lower or zero tariffs, which a member may offer to a
trade partner unilaterally. This is often the first small step
towards the creation of a trading bloc.
Free trade area
Free Trade Areas (FTAs) are created when two or more
countries in a region agree to reduce or eliminate barriers to
trade on all goods coming from other members. This is the
most basic form of economic cooperation. Member countries
remove all barriers to trade between themselves but are free to
independently determine trade policies with nonmember
nations. An example is the North American Free Trade
Agreement (NAFTA).
A customs union is an agreement between
member countries to trade freely with each
other and impose common tariffs on non-
members (called ‘third parties’) – referred to a
CETs (common external tariffs).
A customs union is a group of countries that
have eliminated tariffs on trade among
themselves and have agreed to apply the same
tariffs to imported goods from countries
outside the union.
The purpose of a CET is to protect the member countries of the customs union from
outside competition by making imported goods more expensive, while at the same
time promoting trade among the member countries by eliminating tariffs on their
trade.
A common market is a type of trade
agreement in which member countries
agree to remove tariffs and other
trade barriers, and to harmonize
regulations in order to promote the
free movement of goods, services, and
factors of production (such as labor
and capital) among member
countries.
Economic and Monetary union: This
type is created when countries enter
into an economic agreement to
remove barriers to trade and adopt
common economic policies. An
example is the European Union (EU).
A monetary union is a zone where a single
monetary policy prevails and inside which a
single currency, or currencies which are perfect
substitutes, circulate freely. Most countries issue
their own currencies that are not linked to
others and thus constitute monetary unions on
their own
Political union: In order to be successful
the more advanced integration steps
are typically accompanied by
unification of economic policies (tax,
social welfare benefits, etc.), reductions
in the rest of the trade barriers,
introduction of supranational bodies,
and gradual moves towards the final
stage, a “political union”. Political union
is the final stage in economic
integration with more formal political
links between the countries.
is the only global international organization
dealing with the rules of trade between
nations. At its heart are the WTO agreements,
negotiated and signed by the bulk of the
world’s trading nations and ratified in their
parliaments. The goal is to ensure that trade
flows as smoothly, predictably and freely as
possible.
The World Trade Organization is a forum for
governments to negotiate trade agreements and settle
trade disputes.
the WTO, which was established in 1995, and its
predecessor organization the GATT have helped to create
a strong and prosperous international trading system,
thereby contributing to unprecedented global economic
growth. The WTO currently has 164 members, of which
117 are developing countries or separate customs
territories.
The WTO's founding and guiding principles remain the pursuit of open borders, the
guarantee of most-favoured-nation principle and non-discriminatory treatment by
and among members, and a commitment to transparency in the conduct of its
activities.
Decisions in the WTO are generally taken by consensus of the entire membership. The
highest institutional body is the Ministerial Conference, which meets roughly every two
years. A General Council conducts the organization's business in the intervals between
Ministerial Conferences.
It publishes : World Trade Outlook Indicator.
WTO's main activities are: c. Monitoring and reviewing the trade
a. Negotiating the reduction or elimination of policies of our members, as well as
obstacles to trade (import tariffs, other ensuring transparency of regional and
barriers to trade) and agreeing on rules bilateral trade agreements;
governing the conduct of international trade
(e.g. antidumping, subsidies, product standards, d. Settling disputes among our members
etc.); regarding the interpretation and
application of the agreements;
b. Administering and monitoring the
application of the WTO's agreed rules for trade e. Building capacity of developing
in goods, trade in services, and trade-related country government officials in
intellectual property rights; international trade
matters;
f. Assisting the process of accession of WTO Functions:
some 30 countries who are not yet Administering WTO trade agreements;
members of the organization; Forum for trade negotiations;
g. Conducting economic research and Handling trade disputes;
collecting and disseminating trade Monitoring trade policies;
data in support of the WTO's other Technical assistance and training for
main activities; and developing economies; and
h. Explaining to and educating the Cooperation with other international
public about the WTO, its mission and organizations.
its activities.
Created in 1945, the IMF is governed by and
accountable to the 189 countries that make up
its near-global membership.
The International Monetary Fund (IMF) is
an organization of 189 countries, working to
foster global monetary cooperation, secure
financial stability, facilitate international
trade, promote high employment and
sustainable economic growth, and reduce
poverty around the world.
The IMF's primary purpose is to ensure the Functions of IMF:
stability of the international monetary system International monetary
—the system of exchange rates and cooperation
international payments that enables countries
Promote exchange rate
(and their citizens) to transact with each
stability
other.
Help deal with economic
IMF publishes following reports:
crisis by providing
-World Economic Outlook;
international coordination -
-Global Financial Stability Report;
loans, plus advice.
-Fiscal Monitor Reports; and
-Regional Economic Reports
The World Bank aims to overcome poverty, enhance
economic growth while caring for the environment and
create individual opportunities and hope. To this end, it
provides low-interest loans, interest-free credits and grants
to developing countries to be invested in education, health,
public administration, infrastructure, financial and private-
sector development, agriculture and environmental and
natural resource management.
The World Bank Group consists of five organizations:
a) The International Bank for Reconstruction and Development
It lends to governments of middle-income and credit worthy low-income countries.
b) The International Development Association
It provides interest-free loans — called credits — and grants to governments of the
poorest countries. Together, IBRD and IDA make up the World Bank.
c) The International Finance Corporation It is the largest global development
institution focused exclusively on the private sector. We help developing countries
achieve sustainable growth by financing investment, mobilizing capital in
international financial markets, and providing advisory services to businesses and
governments.
d) The Multilateral Investment Guarantee Agency
The Multilateral Investment Guarantee Agency (MIGA) was created in 1988 to
promote foreign direct investment into developing countries to support economic
growth, reduce poverty, and improve people’s lives. MIGA fulfills this mandate by
offering political risk insurance (guarantees) to investors and lenders.
e) The International Centre for Settlement of Investment Disputes
The International Centre for Settlement of Investment Disputes (ICSID) provides
international facilities for conciliation and arbitration of investment disputes.
World bank publishes following reports/indices:
1. Ease of Doing Business .
2. World Development Report .
3. Global Economic Prospect (GEP) report
4. Remittance Report
5. Ease of Living Index.
6. India Development Update
7. Universal Health Coverage Index
8. The Service Trade Restriction Index
ASEAN is the most prominent regional
grouping in Asia. The Association of
Southeast Asian Nations is a geopolitical
and economic organization of ten countries
located in Southeast Asia, which was formed
on 8 August 1967 by Indonesia, Malaysia,
the Philippines, Singapore and Thailand.
Since then, membership has expanded to
include Brunei, Burma (Myanmar),
Cambodia, Laos, and Vietnam.
Its aims includes:
accelerating economic growth;
to promote Southeast Asian studies
to promote active collaboration and mutual assistance on matters of common
interest in the economic, social, cultural, technical, scientific and
administrative fields;
social progress, and cultural development among its members;
protection of regional peace and stability; and
opportunities for member countries to discuss differences peacefully;
ASEAN has emphasized regional cooperation on the three pillars of security
and socio-cultural and economic integration. It has made most progress in
economic integration and aims to create an ASEAN Economic Community
(AEC) by 2015
The North American Free Trade Agreement
(NAFTA) is a comprehensive trade agreement
that sets the rules of trade and investment
between Canada, the United States, and Mexico.
Since the agreement entered into force on
January 1, 1994, NAFTA has systematically
eliminated most tariff and non-tariff barriers
to free trade and investment between the three
NAFTA countries.
The EU is the world’s largest trading
bloc, and second largest economy, after
the USA. The European Union (EU) is an
economic and political union of 27
member states that are located
primarily in Europe. The EU operates
through a system of supranational
independent institutions and
intergovernmental negotiated decisions
by the member states.
The EU has developed a single market
through a standardised system of laws The European Union (EU) has four
that apply in all member states. Within main institutions namely:
the Council of Ministers
the Schengen Area (which includes 22 EU the European Commission,
and 4 non-EU states) passport controls the European Parliament and
have been abolished. EU policies aim to the European Court of Justice.
ensure the free movement of people, Other bodies such as
goods, services, and capital, enact the Economic and Social
legislation in justice and home affairs, Committee; and
the Committee of the Regions
and maintain common policies on trade, have particular roles to play in
agriculture, fisheries and regional the decision making process.
development.
The initial aim was to create a single market for goods, services, capital, and labour by
eliminating barriers to trade and promoting free trade between members. Some examples of
the role the European Union plays around the world are:
the EU promotes peace and reconciliation through its political, practical and economic
support.
it provides development aid which is making a huge difference to millions of people’s
livelihoods around the world.
the Union is committed to human rights and works to ensure they are respected
universally.
the Union works closely with the United Nations on a host of issues.
it supports in building security around the world through its Common Security and
Defence Policy (CSDP).
the European Union is the world’s largest trading bloc. Trade is a common policy so the EU
speaks with a single voice in trade negotiations with international partners in promoting
a free and fairer international trading system.
The South Asian Association for Regional Cooperation (SAARC) is an organisation of
South Asian nations, which was established on 8 December 1985 when the government
of Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka formally
adopted its charter providing for the promotion of economic and social progress,
cultural development within the South Asia region and also for friendship and
cooperation with other developing countries. It is dedicated to economic, technological,
social, and cultural development emphasizing collective self-reliance.
Objectives of SAARC
The objectives, principles and general provisions, as mentioned
in the SAARC Charter, are as follows: –
The main goal of the To promote the welfare of the peoples of South Asia and to
improve their quality of life; –
Association is
To accelerate economic growth, social progress and cultural
to accelerate the process development in the region and to provide all individuals
the opportunity to live in dignity and to realise their full
of economic and social potentials;
To promote and strengthen collective self-reliance among
development in member the countries of South Asia;
To contribute to mutual trust, understanding and
states, through joint
appreciation of one another’s problems;
action in the agreed – To strengthen cooperation with other developing
countries;
areas of cooperation. To cooperate with international and regional
organizations with similar aims and purposes
Genesis 12:1-4
1 Yahweh said to Abram, 'Leave your country, your kindred and your father's house
for a country which I shall show you;
2 and I shall make you a great nation, I shall bless you and make your name
famous; you are to be a blessing!
3 I shall bless those who bless you, and shall curse those who curse you, and all
clans on earth will bless themselves by you.'
4 So Abram went as Yahweh told him, and Lot went with him. Abram was seventy-
five years old when he left Haran.
