WHAT IS ECONOMIC INTEGRATION?
Economic integration is a condition of international trade in which all trade barriers and restrictions are removed. There is perfect capital mobility, complete freedom of migration, complete freedom of establishment of businesses, and unhindered flow of information and technology. As stated above, economic integration is thus a form of international co-operation among some nations to foster mainly, their economic interest.
There are different levels of economic integration as mentioned and discussed below.
WHAT ARE THE TYPES OF ECONOMIC INTEGRATION
(i) Monetary Union: Under this system, the different currencies of the member countries can be exchanged freely at fixed rates. monetary union is not in line with economic integration.
(ii) Currency Union: All member countries involved use one currency which is jointly managed by them e.g. The use of CFA Franc by some Francophone West African countries.
(iii) Free Trade Area: All artificial restrictions to trade between the member countries are removed but each country is free to adopt any trade policy it may deem appropriate towards nonmember countries. common internal and external tariff policy. Apart from eliminating all trade barriers between them, they adopt a common tariff
(iv) Customs Union: The members adopt an agreement towards non-member countries.
(v) Economic Community (Common Market): In addition to the adoption of a common internal and external tariff policy, there is free mobility of the factors of production between the member states. An economic community also harmonizes development in areas of scientific, social, cultural, and economic policies.
(vi) Economic Union: This is a situation of full economic integration. It goes a step further than the Common Market. All economic policies are harmonized; there is free mobility of factors of production and commodities; a common internal and external tariff structure is adopted. common Also, a common currency is used, and monetary fiscal and income policies are and harmonized.
OBJECTIVES AND AIMS OF ECONOMIC INTEGRATION
(i) To promote increased trading activities among
the member states.
(ii) To eliminate wasteful competition among the member countries and facilitate greater utilization of excess capacity, leading to higher productivity.
(iii) To ensure a higher degree of specialization and encourage production according to comparative advantage, leading to higher output and lower production costs.
(iv) To speed up economic development with the economic grouping through joint development efforts and CO-operation in various areas of economic activity.
(v) To provide a more effective front for purposes of collective bargaining with their world countries.
(vi) To provide a large market that would enable heavy industries to derive economies of scale and foster economic development.
(vii) To increase the general level of the economic welfare of the citizens of member states through increased efficiency in production and distribution.
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