Economic Integration


Economic integration is the process by which different economies come together to form a single economy or a group of economies that work closely together. This can be done in a number of ways, such as by lowering trade hurdles, making economic policies consistent, and making sure that monetary and fiscal policies in the involved countries are coordinated. The main goal of economic union is to make it easier for countries to work together economically, make them more efficient, and help them grow their economies.

There are different stages of economic integration that show how much teamwork and coordination there is:

1.Free Trade Area (FTA): A free trade area is the easiest way for countries to join together economically. In a free trade area, countries agree to get rid of tariffs and other trade hurdles on goods and services they trade with each other. But each member country still has its own trade practices with countries that are not part of the EU.

2.Customs Union: In a customs union, member countries get rid of internal tariffs and set up a shared external tariff on goods from countries that are not part of the union. This means that all member countries use the same tax rates on goods from outside the union. The Southern African Customs Union (SACU) is a type of customs union.

3.Common Market: A common market goes further than the removal of trade hurdles and the setting up of a common external price in terms of integration. It makes it possible for goods and services, as well as factors of production like labor and capital, to move freely between partner countries. A shared market is something like the European Union (EU).

4.Economic Union: A higher level of unity is needed for an economic union than for a shared market. It includes making sure that economic policies, like fiscal and monetary policies, are in line with each other so that member countries have a more unified economic framework. An example of an economic union is the Economic and Monetary Union (EMU) in the EU, which made the euro currency possible.

5.Political Union: This is the highest level of economic union, where member countries not only share an economic system but also share political structures and ways of making decisions. The final goal of a political union is to create a single sovereign body with a single government. A political union is something like the United States.

Why economic integration is good:

1.Increased Trade: Economic unity makes it easier for goods and services to move freely between countries that are part of it. This leads to more trade and bigger markets for companies.

2.Economies of scale: When partner countries share resources and markets, they can take advantage of economies of scale. This makes production more efficient and lowers costs.

3.Enhanced Investment: Economic unity can make it easier for businesses to get foreign direct investment (FDI) because they can reach a bigger market and take advantage of fewer trade hurdles.

4.Job Creation and Economic Growth: More economic action and better use of resources can lead to more jobs and faster economic growth.

5.Cooperation and security: Economic unity makes it easier for member countries to work together and rely on each other, which can help to peace and security in the area.

Problems that come with economic integration:

1.Disparities: Different member countries may be at different stages of economic growth, and economic union could make these differences worse.

2.Loss of Sovereignty: Some critics say that economic union could lead to a loss of national sovereignty because member countries have to give some decision-making power to supranational groups.

3.Costs of adjusting: Industries that were once sheltered may find it hard to adjust to more competition, which could lead to job losses in some areas.

4.Policy Coordination: It can be hard for member countries to have similar economic policies because they have different economic goals and concerns.

Overall, economic integration can be a strong way to help countries grow economically and work together, but it needs careful planning and good policy teamwork to get the most out of it and face the fewest problems.


  1. […] Many nations have abandoned import substitution policies in favor of export-oriented strategies over time. Export-oriented policies emphasize the production of products for international markets, the encouragement of competition, and the attraction of foreign investment. These policies have proven more effective for nations pursuing sustained economic growth and global economic integration. […]

  2. […] Economic Integration: One of the main goals of the GCC is to help member states become more economically integrated. To do this, they have taken a number of steps, such as creating a customs union in 2003 and a shared market in 2008. These efforts have made it easier for goods, services, capital, and labor to move freely. This has made trade easier and made the area more competitive. […]

  3. […] Economic Integration: ASEAN has done a lot to encourage economic unity and integration. When the ASEAN Free Trade Area (AFTA) was set up in 1992, trade obstacles were greatly lowered, which helped trade and investments within the area. ASEAN started the ASEAN Economic Community (AEC) in 2015. This improved economic cooperation, made policies more similar, and made it easier for goods, services, skilled labor, and capital to move freely. […]


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