Economic integration


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Economic integration

  1. 1. Economic Integration Victoria RockAccording to Investopedia, economic integration is an arrangement between different regions, markedby the reduction or elimination of trade barriers with a purpose to reduce costs for both consumers andproducers and to increase trade between the countries taking part in the agreement. (Investopedia)There are several advantages and disadvantages to economic integration. Two advantages are; tradecreation and employment opportunities. Trade creation allows for a wider selection of goods andservices, a lower cost after trade barriers are removed, and encourages more trade between membercountries. Employment opportunities in economic integration, motivates an extra savings into thenation as well as generates additional job prospects for individuals as they shift from one nation toanother in the search employment. (College Accounting Coach)Some disadvantages include trade diversion and national sovereignty. Trade diversion/ trade barriers,diverts trade from a non-member country to a member country despite the inefficiency in cost.National Sovereignty requires member countries to give up some degree of control over key policies.The higher the level of integration means the greater the degree of control given up. (CollegeAccounting Coach) When a country’s government commits to taking part in a local trade bloc, there are a number ofconcerns that can catch small organizations off guard. These vary from, competition, shortfall ofworkers, and the incapability to acquire superior quality goods. One advantage of a trade bloc is thelessening of government participation in trade. Tariffs or import taxes could be made compulsory inorder to bring down the level of competition.Government can help by trimming down the amount of imported products through quotas. Doing thiswill still permit some of the products into the nation, while at the same time guaranteeing thatorganizations inside the nation or bloc could still try to win. One useful method the government cancarry out is to make sure that short term finance matters are handled by establishing help provisionsand ensuring that facilities inside the nation go along in order to handle inadequacies.Government needs to keep an eye on the way contribution inside a trade bloc influences organizations.The minimum extent of government contribution may prove to be most appropriate. Trade blocs arealways being modified. Negotiations that a nation adopts in the short period to assist circumstances canhave enduring impacts on nations that might desire to contribute inside the bloc in upcoming times.ReferenceEconomic Integration.(n.d.) Investopedia: Dictionary. Investopedia. Retrieved January 17,2012. from:
  2. 2. College Accounting Coach.(October 3, 2008)The Advantages And Disadvantages of EconomicIntegration. College Accounting Coach. Retrieved January 17, 2012.from:, C., Runge, C. & Moulton, K. (n.d.).Preferential Trading Arrangements: Gainers and Losers fromRegional Trading Blocs. Southern Agriculture in a World Economy. Retrieved. January 16, 2012.from: