economic integration is the coming together of countries with common interest to form themselves into an organization with the major objective of creating better economic atmosphere and removing trade barriers or other obstacles that diminish the free flow of good and services in the economies between or among the associated members. The degree of cooperation depends largely on the ideologies of the ruling class in the member countries. Studies have clearly shown that the existence of ideological differences may complicate things for economic integration. The European economic community has been sustained for long time because member nations have the same ideology.
Economic integration encourages specialization and it promotes large scale production. It is highly desirable among nations which are ready to demonstrate commitment to it.
OBJECTIVES OF ECONOMIC INTEGRATION
To increase the economic welfare of the member countries through greater investment, specialization and healthy competition.
To present a common front by bringing countries together to solve economic problem
To tackle the problem of unevenness of resources endowment by encouraging development in member countries through specialization and large scale production
To ensure success in the struggle against economic domination and subjugation by external forces through cooperation.
To alleviate if not eliminate poverty among member countries.
To speed up industrialization in the member countries at lower cost.
To promote liberalisation and a common market devoid of the hurdles of qouta restrictions and custom duties and thus overcome the problem of small size which characterises many domestic markets.
To improve and promote economic stability among the member nations.
To bring about structural transformation of developing economies as in reducing the subsistence level and improving the monetisation of the economic.
To take advantage of the economies of scale (both internal and external)
TYPE OF ECONOMIC INTEGRATION
The different type of economic integration are:
Preferential area
Free trade area
Customs union
Common market
Economic union
PREFERENTIAL AREA: This is an economic integration in which the members agree to grant one another more favorable tariff for members compared with non members. Example include preference granted by France, Britain and the united state of america to there dependents.
FREE TRADE AREA
This is an economic integration in which member countries remove all traffic on trade between or among the members. Each country however retains it traffic rates against the non members. An example of this economic integration is the European free trade association, the general agreement on traffics and trade, the Latin America free trade area, and so on.
CUSTOM UNION
This is another free trade area in which member countries remove all traffics against members. The different between free trade area and custom union lies in the fact that member countries in customs union have harmonizer traffic rate that they use against non members. An example of the customs union is the customs union of west African states. All French speaking west African countries with the exception of Togo are members.
COMMON MARKET
This economic integration is a kind of custom union. It prohibits intra tariffs and maintains common tariffs against non members. It further goes to the extent of permitting free movement of labor and capital among the member countries. An example is the European economic community. Another example is the European coal and steel community, which maintain a common market in coal and steel product only.
ECONOMIC UNION
This is an economic integration in which member countries remove intra tariffs, maintain common tariffs in dealings with non members and go to the extent of harmonizing of certain policies such as currency, monetary policy, planning and industrialization. This form of economic integration makes the participating countries, one country , economically. No economic integration possesses all them characteristics of economic union in the word as at now. The European economic community possesses some of its characteristics but it is yet to possess all.