INTB 1209 Chapter Notes - Chapter 9: Trade Diversion, Trade Creation, Political Union
22 Mar 2016
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Regional economic integration we mean agreements among countries in a geographic region to reduce and ultimately remove tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other. Good for consumers because of lower prices bad for businesses because of more competitive market (cid:1) Customs union eliminates trade barriers between member countries and adopts a common external trade policy: similar to a free trade area but also dictates how to treat trade with nonmembers. Economic union involves the free flow of products and factors of production among member-countries and the adoption of a common external trade policy, but also requires a common currency. Political union in which a central political apparatus coordinates the economic, social, and foreign policy of the members states. (cid:1) The economic case for integration: free trade allows specialization and makes every country better off.
