Presentation on theme: "Regional Economic Integration. Introduction Regional economic integration is the political and economic integration among countries that give preference."— Presentation transcript:
Introduction Regional economic integration is the political and economic integration among countries that give preference to member countries to the agreement. The idea of economic integration was started after World War II as countries realized the benefits of cooperation and larger market size. MNCs need to adjust organizational structure and operating strategy to take advantage of regional trade groups.
Regional Economic Integration Issues : i)distances ii)similarity in consumers preferences iii)common history and interest among neighboring countries Types : i)Free trade area – no internal tariffs ii)Customs union – common external tariffs iii)Common market – factor mobility iv)Economic integration – coordinate fiscal & monetary policy
The Effects of Integration Regional integration has social, cultural, political and economic effects Static effects & dynamic effects Trade creation & trade diversion Economies of scale
The European Unions The EU is an effective common market that has abolished most restriction on factor mobility Harmonising national political, economic and social policies Among the member of EU; Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy
Goals of The European Unions EU’s major goals are to abolish intrazonal restrictions on the movement of goods, capital, services & labor. To establish a common external tariff To achieve a common agricultural policy To harmonise tax and legal systems To devise a uniform policy concerning antitrust To establish common currency and monetary policy
North American Free Trade Agreement (NAFTA) is designed to eliminate tariff barriers. To liberalise investment opportunities and trade services Key provisions in NAFTA are labour & environmental agreements.
Commodity Agreements Two types : i)Producers’ Alliances ii)International Commodity Control Agreements (ICCAs) Introduce stabilisation schemes to stabilise commodity prices. Quota system