Global and Regional Economic Integration

1
Global and Regional Economic Integration

• Aim To examine different forms of regional
• economic integration and some of the
• major regional economic groupings.

2
Global and Regional Economic Integration (cont.)

• What is regional economic integration?

3
Global and Regional Economic Integration (cont.)

• Forms/Levels of Economic Integration
• Increasing in degree of economic integration
• Free Trade Area
• Customs Union
• Common Market
• Economic Union
• Political Union

4
Forms/Levels of Economic Integration (cont.)

• Free Trade Area
• Members remove tariffs and other barriers to
  international trade among themselves.
• Each member may establish its own trade policies
  with non-member countries.

5
Forms/Levels of Economic Integration (cont.)

• Customs Union
• Free Trade Area policy
• Members also adopt common trade policies towards
  non-member countries.

6
Forms/Levels of Economic Integration (cont.)

• Common Market
• Customs Union policy
• Members also eliminate barriers that restrict
  movement of factors of production among
  themselves.

7
Forms/Levels of Economic Integration (cont.)

• Economic Union
• Common Market policy
• Members more fully integrate their economies by
• co-ordinating their economic policies

8
Forms/Levels of Economic Integration (cont.)

• Political Union
• By encompassing both political and economic
• integration, the union effectively transforms
  itself
• into one country.
• (based on Griffin/Pustay)

9
Global and Regional Economic Integration (cont.)

• List some examples of regional economic
• integration.
• Where are they located geographically?

10
Global and Regional Economic Integration (cont.)

• EUROPE
• EEC ? EC ? EU ? ?
• (1957) (1980s) (1993)
• European Free Trade Association (EFTA)
• Iceland, Liechtenstein, Norway, Switzerland
• European Economic Area (EEA)
• EU EFTA, not Switzerland

11
Europe (cont.)

• Central European Free Trade Association
• (CEFTA)
• Based on 1991 Visegrad Agreement
• Czech Republic, Slovakia, Hungary, Poland
• Romania, Bulgaria, Slovenia joined later

12
The Americas

• North American Free Trade Agreement
• (NAFTA)
• established in 1994
• USA, Canada, Mexico
• Free Trade Area

13
The Americas (cont.)

• MERCOSUR
•  
• established in 1991
• Argentina, Brazil, Paraguay, Uruguay 
• Customs Union aim Common Market
• Chile, Bolivia associate members (free trade
  area)
• member states generate 80 of GNP in South
  America
• trade among member states tripled in first six
  years
• Committed to establishment of South American Free
  Trade Area (SAFTA)

14
The Americas (cont.)

• Andean Common Market (ANCOM)
• established in 1969
• Bolivia, Chile (withdrew 1976), Colombia,
  Ecuador, Peru, Venezuela.
• Customs Union aim Common Market
• North-western part of Latin America
• Second in importance in South America

15
Asia

• Association of South East Asian Nations
• (ASEAN)
• established in 1967
• Brunei, Indonesia, Malaysia, Philippines,
  Singapore, Thailand.
•  1990s Cambodia, Laos, Vietnam
• Free Trade Area
• Large imbalance in income per capita
• Brunei 15,000 vs Vietnam 350
• Severely affected by Southeast Asian financial
  crisis

16
Asia (cont.)

• Asia Pacific Economic Co-operation (APEC)
•  
• established in 1990
• 18 member states including US, Japan, China,
  Australia, New Zealand
• Objective Promotion of multilateral economic
  co-operation on trade and investment issues.
•  vague and lacking in relevance at present
• potentially the worlds largest free trade area.

17
Africa

• several regional groupings established during
  1970s and 80s
• Economic Community of Central African States
  (CEEAC)
• Economic Community of West African States
  (ECOWAS)
• Southern African Development Community (SADC)
• general political instability
• lack of infrastructure (transport) for regional
  trade

18
Summary

• Levels of economic integration
• -Free Trade Area
• - Customs Union
• - Common Market
• - Economic Union
• - Political Union
• Examples of economic integration
•   - Europe
• - The Americas
• - Asia
• - Africa