Regional Economic
Integration refers to the process in which neighbouring
countries or regions enter into agreements to enhance economic cooperation.
This involves reducing or eliminating barriers to trade, investment, and labour
movement.
There are five main types
of regional economic integration:
 |
| free trade, customs union, economic union, political union, and common market |
Free trade area:
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
non-member nations.
Example:
North American Free Trade Agreement (NAFTA)
Customs Union:
In a customs union,
member countries not only remove trade barriers among themselves but also adopt
a common external tariff on imports from non-members.
Example: Southern
African Customs Union (SACU)
Common Market:
This goes beyond a
customs union by allowing the free movement of goods, services, capital, and labour
among member countries.
The primary advantage to workers
is that they no longer need a visa or work permit to work in another member
country of a common market.
Economic union:
This type is created when
countries enter into an economic agreement to remove barriers to trade and
adopt common economic policies.
An economic union
involves full integration, including a common market and harmonized economic
policies such as fiscal and monetary policy.
Example:
The European Union with the adoption of a single currency (Euro) and shared
governance institutions.
Political Union:
The highest level of
integration, where member states unify not only economically but also
politically, potentially forming a single nation.
Advantages:
1.
Increased Trade
2.
Economic Efficiency
3.
Enhanced Competitiveness
4.
Political Cooperation
5.
Employment opportunities
Limitations-
1.
Employment shifts and reductions
2.
Loss of national sovereignty
3.
Cultural and Political Differences
