THE MWALIMU NYERERE MEMORIAL ACADEMY

KARUME CAMPUS, ZANZIBAR

DEPERTMENT OF ECONOMICS STUDIES

NTA LEVEL 6: ORDINARY DIPLOMA IN ECONOMIC DEVELOPMENT

MODULE NAME: MACROECONOMICS

COURSE CODE: EST 06101

INSTRUCTOR NAME: MR. MAXIMILLIAN KAILANGANA

NATURE OF WORK: GROUP ASSIGNMENT

PARTICIPANT;

NAME REGISTRATION NUMBER

SALUM, ABDULLATIF JUMA MNMA/ODZ.ED/0013/18

KHAMIS, HAJI GORA MNMA/ODZ.ED/0025/18

MOHAMED, NASRA MASHAKA MNMA/ODZ.ED/0029/18

SARBOKO, PILI MAKARAN MNMA/ODZ.ED/0037/18

QUESTIONS:
1(a) Explain with example different stages of economic integration
(b) East Africa Community have reached in which stage in the regional integration (give
reason in your answer)

SUBMISSION DATE: 09 January 2020

(a) Economic integration, or regional integration, is an agreement among nations to reduce or
eliminate trade barriers and agree on fiscal policies. Economic integration explained when
regional economies agree on integration, trade barriers fall and economic and political
coordination increases. The following are the stages of economic integration:
Free trade area.

A group of countries committed to removing all barriers to the free flow of goods and services
between each other, but pursuing independent external trade policies. Tariffs (a tax imposed on
imported goods) between member countries are significantly reduced, some abolished altogether.
Each member country keeps its own tariffs in regard to third countries. The general goal of free
trade agreements is to develop economies of scale and comparative advantages, which promotes
economic efficiency.

Custom union.

Form of regional economic integration that combines features of free trade area with common
trade policies toward nonmember countries. Sets common external tariffs among member
countries, implying that the same tariffs are applied to third countries; a common trade regime is
achieved. Custom unions are particularly useful to level the competitive playing field and
address the problem of re-exports (using preferential tariffs in one country to enter another
country).

Common market.

A form of economic integration whereby members move forward to establish not only free trade
in goods and services but also free movement of factors of production. Services and capital are
free to move within member countries, expanding scale economies and comparative advantages.
However, each national market has its own regulations such as product standards.

Economic union (single market).

A group of countries committed to removing trade barriers, adopting a common currency,

harmonizing tax rates, and pursuing a common external trade policy. All tariffs are removed for
trade between member countries, creating a uniform (single) market. There are also free
movements of labor, enabling workers in a member country is able to move and work in another
1
member country. Monetary and fiscal policies between member countries are harmonized, which
implies a level of political integration. A further step concerns a monetary union where a
common currency is used, such as with the European Union (Euro).

Political union.

Economic and political integration whereby countries coordinate aspects of their economic and
political systems. Represents the potentially most advanced form of integration with a common
government and were the sovereignty of member country is significantly reduced. Only found
within nation states, such as federations where there is a central government and regions having a
level of autonomy.

Generally, the economic integration established for the purpose of increase of trade between
member states of economic unions rests on the supposed productivity gains from integration

(b) East Africa Community have reached in common market stage in the regional integration.
On 1ST July 2010 the East Africa Community (EAC) common market become operation. The
actual negotiation of the establishment of the common market started in April 2008 and ended
November 2009 when the EAC heads of states signed the protocol on the establishment of the
EAC common market. The ratification process was completed by each respective partner state
and in July 2010 the common market come into force.

REFERENCE
2
Haas, Ernst B. (1971) ‘The Study of Regional Integration: Reflections on the Joy and Anguish of
Pretheorizing
Lindberg, Leon N., and Stuart A. Scheingold (1971). Regional Integration: Theory and
Research
Thongkholal Haokip (2012), "Recent Trends in Regional Integration and the Indian
Experience", 
Van Langenhove (2013.) Integrating Africa: Perspectives on Regional Integration and
Development,