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“Hi. That has a macro video and we re going to be working through the the different stages of economic integration between countries nations might decide to deepen their economic for example through membership of a customs union or a single market or they might decide to widen their integration by bringing more countries into an agreement. The issue of integration at a macro level at an international level has heightened in recent times of course. Given the uk s vote to leave the european union.
So here are the main types of integration that you need to know about there are some interesting examples to look at from both an emerging and developing country perspective. And it raises interesting questions about the extent to which integration between countries can act as a catalyst for increased trade and investment and ultimately stronger growth and development the way to think about this is to consider the different layers of integration as we go through the process. So initially if you just degree a free trade area. And that can take several years to to come to fruition.
A free trade there of course is designed to bring down tariff walls eliminate quotas and subsidies and try to generate free trade in goods and services between countries in an area so this is basically no internal trade barriers..
But customs union did develops the integration deepens the connections and it adds both free trade and adds to the system a common external tariff tariff is placed around the customs union single market is a deeper stage of integration yes free trade common external tariff. But also factor and asset ability. So free movement of goods services. People and capital.
You might want to go to stage. 4. Which is a monetary union. Which involves all of the previous stages.
But we add to that a common currency..
Single exchange rate and a single central bank in charge of monetary policy and ultimately of course you could get to economic union. Basically that evolves countries accruing common economic policy. That might evolve. Having some harmonization of direct and indirect taxes perhaps with much more stringent common labor market and product market rules of operation.
So as we go from free trade area to commit union. We are deepening our integration between countries if we bring more countries into each level then we are enlarging enlarging or widening the integration. What are two examples of free trade areas they revised trade agreement between the united states mexico and canada very interesting one the african continent on free trade agreement involving more than 50 african countries. The recently signed eu canadian free trade agreement and the likewise one between the opinion and in japan.
The united states recently signed a free trade agreement with south korea so those are good examples of bilateral and multilateral free trade agreements custom julian comprises countries that agreed to abolish tariffs and quotas between member nations..
But also to a doctor common external tariff on imports from non member countries. So the european union is a customs union. So too is the southern african customs union. Sakhu and also the eurasian customs union.
Sema market of course is a deeper stage of integration. The european union singer market is built on four freedoms free movement of labor free trading goods and free trading services. But also crucially the free movement of capital from one country to another being financial capital bonds equities currencies as well as foreign direct investment the the eu of course is a single market so too is asea you have 10 southeast asian countries developing a single market and also caricom the caribbean single market and economy. We ll achieve in the next stage of integration well of course.
The euro is a single currency area with 19 member nations at the moment..
But there are other military leaders you might want to explore maybe do a bit of research on this the west african monetary union. Which uses the the franc their own flankers of single currency and the eastern caribbean currency lien has also been developed using one currency within that within their trade and economic area. So these are well worth exploring as contextual examples. So there we go quick look at integration between countries going from free trade.
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