Trading Blocs
Economic Integration
Syllabus requirement
Economic integration among groups of countries aims to reduce or eliminate trade barriers. This can take different forms, such as free trade areas or agreements where countries remove tariffs between themselves, customs unions which add a common external tariff, and common markets that allow free movement of goods, services, capital, and labor among member countries.
Summary
This topic explains trading blocs, groups of countries that reduce or remove trade barriers among members to promote economic integration. It describes three main types — free trade areas, customs unions and common markets — and how they differ in treatment of non-members, the depth of integration, and factor mobility. The chapter also outlines benefits such as economies of scale, increased employment opportunities and stronger bargaining power, as well as effects like increased competition for domestic producers and barriers for non-members.
