ECONOMIC INTEGRATION

Shanley kate Delambotique

2022-01-00036
Week 7-October 11, 2022
 ECONOMIC
INTEGRATION
*LEVELS OF ECONOMIC INTEGRATION
*VARIOUS ARGUMENTS OF ECONOMIC INTEGRATION
*ORGANIZATION OF THE EUROPEAN COMMUNITY
 What is Economic Integration?
• process to in which countries agreed to eliminate barriers to reduce cost of
trade and increase trading.
• There are two (2) approaches to Economic integration:
* International approach
* Regional approach
Two approaches in Economic Integration
• International approach • Regional approach
-It is an integration between -It is an integration between
nations via WTO (World Trade countries to eliminate trade barriers
Organization). among themselves while
maintaining the barriers to trade at
the rest of the world.
Benefits of Economic Integration
 Trade Creation
By lowering or eliminating trade and investment barriers, like as
tariffs, cooperation opens up additional opportunities for trade
between nations. Cooperation also lowers prices for consumers
in the block countries.
 Employment Opportunities
Economic integration can assist increase job opportunities by
lifting constraints on labor movement. It also results in better
market expansion and technology exchange, both of which are
advantageous to all economies.
 Consensus and cooperation
Regional understanding and affinities might promote
closer political collaboration.
Cost of Economic Integration
 Trade Diversion
Weaker companies can be unintentionally protected by the block agreement
acting as a trade barrier; in essence, regional agreements can form new
trade barriers with the country outside of the trading block. Member
countries are permitted to trade more with one another than with non-
member nations, which may result in increased trade with a less efficient or
more expensive producer simply because they are in a member country.
 Employment Shifts and
Reduction
Similarly to how governments may relocate production to
member nations with less labor costs, workers may travel in
search of better employment opportunities and compensation.
 Loss of National Sovereignty
A regional block of nations may see that they need to give up
more of their political and economic rights with each new round
of negotiations and agreements.
 Rising Crime Rate associated
with Immigration
In many European countries there has been a lot of complain about the
increasing number of criminal case that are caused by illegal immigrants.
Tariff
- it is the tax on import good or products that is from another country.

Internal barriers/rules
- regulations that members must follow for the behavior among member
countries.

External barriers/rules
-regulations that members follow for behavior among non- member country.
 Levels of Economic Integration
• Free Trade
• Custom Union
• Common Market
• Economic Union
• Political Union
 Free Trade

• Eliminate internal barriers but maintain

independent to external barriers.
e.g. NAFTA
 Custom Union

• Eliminate internal barriers, and agree on common

external barriers.
 Common Market

• Eliminate internal barriers, adopt common

external barriers, and also allow free movement
of resources such as labor among member
countries.
 Economic Union

• Eliminate internal barriers, adopt common external

barriers, free movement of resources and a uniform set
of economic policies.
e.g. European Union
 Political Union
• An agreement between two or more countries to coordinate their
economic monetary and political system, and required to implement a
common stance on economic and political policies against non-members.
Various Arguments of
Economic Integration
 Various Arguments of Economic Integration

• Economic Case for Integration • Political Case for Integration

-economic integration can be
viewed as an effort to maximize the
benefits of free trade and investment
between nations beyond what is
possible under international accords
like the WTO.
-there are incentives for
political cooperation between
neighboring governments as their
economies are linked and become
more dependent on one another,
which lowers the likelihood of
armed conflict.
Organization of the European
Community
 What is the European Community?
• Formed economic association in 1957,with six (6) European member
countries.
• It is consisted of three (3) Economic Organization:
* European Economic Community (EEC)
* European Coal and Steel Community (ECSC
*European Atomic Energy Community (Euratom).
 European Economic Community (EEC)
- established in 1957 by the Treaty of Rome in an attempt to unify the
Europe ‘s economies to lower the risk that may arise that could lead to war.

European Coal and Steel Community (ECSC)

-It was implemented to attempt to regulate manufacturing practices among
the member states.

European Atomic Energy Community

-created in 1958 to establish a common market among member nations
for trade in nuclear materials and equipment.
SUMMARY
 Economic integration
• Process to eliminate trade barriers.
Two approaches of economic integration
* International approach
* Regional approach
 Benefits and Cost of Economic Integration

BENEFITS
• Trade Creation
• Employment Opportunities
• Consensus and cooperation
COST
• Trade Diversion
• Employment Shifts and Reduction
• Loss of National Sovereignty
• Rising Crime Rate associated with
Immigration
 Levels of Economic Integration
• Free Trade
• Custom Union
• Common Market
• Economic Union
• Political Union
 Organization of European Community

• European Economic Community (EEC)

• European Coal and Steel Community (ECSC)
• European Atomic Energy Community
THANK YOU!
 REFERENCES

(Balassa, 1991)
Balassa, B. (1991). Economic Integration. The World of Economics, 176–186. https://
doi.org/10.1007/978-1-349-21315-3_25

(The Making of a World Trading Power | the European Economic Community, 2016)
The Making of a World Trading Power | The European Economic Community. (2016, March 3).
Taylor & Francis. Retrieved October 2, 2022, from https://
www.taylorfrancis.com/books/mono/10.4324/9781315555843/making-world-trading-power-lucia-coppolaro

(Glockner and Rittberger, 2022)

Glockner, I. and Rittberger, B., 2022. The European Coal and Steel Community (ECSC) and European
Defence Community (EDC) Treaties