Regional economic integration refers to agreements among countries in a geographic region to reduce and ultimately remove trade barriers between each other. There are different levels of integration ranging from free trade areas to economic unions. An economic union involves free flow of goods, services, capital and labor between members and a common external trade policy. Regional integration can provide economic benefits from increased specialization and trade. It can also increase political cooperation and influence by linking economies. However, integration poses challenges like loss of sovereignty and potential job losses in some industries.

1. International
Business
Presented By – Chinmaya Mallik
Topic – Regional Economic Integration
Department Of Commerce & International Business. Central University Of Kerala

2. Regional Economic Integration :
It refers to agreements among countries in a geographic region for
reduce , and ultimately remove tariff and non tariff barriers to the free
flow of goods , services and factors of production between each other.

3. Levels Of Economic Integration.
 Political Union
 Economic Union
 Common Market
 Customs Union
 Free Trade Area

4. Political Union – Moving toward economic union , raises questions of how to
coordinate bureaucracy accountable to the citizens of member nations. Political
union in which a central political apparatus coordinates the economic , social, and
foreign policy of the member states is the answer.
Economic Union – Involves free flow of products and factors of production
between member countries and adoption of a common external trade policy. It
also requires common currency , harmonization of members’ tax rates , and a
common monetary and fiscal policy .

5. Common Market - Has no barriers to trade between member countries ,
includes a common external trade policy , and allows factors of production to
move freely between members.
Customs Unions – Eliminates trade barriers between member countries and
adopts a common external trade policy.
Free Trade Area – All barriers to the trade of goods and services among
member countries are removed .

6. Cases For Regeional Integration
1. Economic Case.
2. Political Case.

7. Economic Case :
 Unrestricted free trade will allow countries to specialize in production of goods
and services that they can produce most efficiently .
 Allowing Free trade stimulates economic growth .
 FDI can transfer technological, marketing and managerial know – how to host
nations.
 It is easier to establish a free trade regional agreement among a free countries
yhan with say WTO.

8. Political Case :
 Linking economic together and creating dependencies forces them to
resolve conflicts in an amiable manner .
 By grouping their economies, the regional countries can enhance their
political clout in the world.

9. Impediments to Integration
 Loss of sovereignty : Giving up controls in fiscal and monetary policy as
well as tax rates .
 Loss of jobs : In some sectors.
NAFTA – USA and Canada workers lost in the textile and
other low-cost jobs.

10. Case Against Regional Integration
Trade Creation : Occurs when high cost domestic producers are
replaced by low-cost producers within the free trade area.
Trade Diversion : Occurs when low-cost external suppliers are
replaced by higher cost suppliers within the free trade area.

11. Thank You
Don’t regret the past , just learn from it …… Chinu