Activity: Forms of Economic Integration

Teacher:
Estefany Machado Muñoz

Author:
David Santiago Rojas Castro

Class: Economic Integration

International Business and Administration Program
Faculty of Economic and Administrative Sciences
International University Foundation of the American Tropics
Yopal, Casanare
2021
On an increasingly globalized world, countries around the world must find ways to
form strategic alliances to boost their economic growth, thus achieving greater well-
being for all residents; That is why multiple trade agreements have been concluded.
These may be bilateral, that means between two countries or also between multiple
countries that are geographically close, or even global; Where free trade agreements
are then established to reduce or eliminate barriers that impede free trade between
member countries, as well as to formulate monetary and fiscal policies to support
monetary and/or governmental management.

It is also important to highlight the advantages of this large and interesting operation;
Firstly, the increase in demand such as consumer income, due to free competition
and the new scheme to reduce business costs, which will result in lower prices;
Secondly, integration favors production specialization, that means each country will
dedicate itself to exploiting the sector that generates the greatest profits for itself;
Thirdly, on the other hand, with the removal of trade barriers, the size of the market
grows by large proportions and, finally, an increase in the economic weight of the
countries, as well as the achievement of a stronger economy.

As well as highlighting and reporting the advantages of this operation, it is also

necessary to bear in mind certain disadvantages of countries with less efficient
production systems or less open ones, since the removal of trade barriers leads to
greater competition between producers and those that are inefficient risk losing the
market. Depending on the level of integration, there is a loss of sovereignty among
the members of the agreement. Integration also generates an increase in imports.

There are various forms of integration, such as:

• Preferential agreement: A preferential agreement is the simplest form of

economic integration in which certain advantages are granted between the
signatories on a reciprocal basis.

• The Free Trade Area: This is an agreement between countries that seeks to
dismantle barriers to internal trade in order to allow free movement of trade in
the area.

• The customs union: This is the agreement between countries which, in

addition to the elimination of trade barriers between member countries.

• Common Market: This is the economic area in which goods and factors move
freely as a result of the liberalization of customs controls and the lifting of
existing tariff barriers.

• Economic Union: The member countries of the economic union are

characterized by a common economic, fiscal and monetary policy.
 • Full integration: Full economic integration occurs when an agreement
provides for the following agreements: common external tariffs, free mobility
of resources, free trade in goods, economic policies, harmonized and unified.

Economic integration as such is the area in which the economies of several countries
are integrated, which has to do with the political and monetary agreements
established between the united countries with the aim of benefiting each other by
reducing or eliminating barriers to free trade, with the aim of achieving economic
growth and greater well-being as a whole.
 Bibliography

• https://www.ingdiaz.org/ensayo-sobre-la-integracion-economica-
regional-caso-union-europea/

• http://www.economia.unam.mx/secss/docs/tesisfe/SantoscoyARJ/cap1
.pdf

• https://www.icesi.edu.co/blogs/icecomex/2008/10/24/integracion-
economica/