Answered: Outline thevarious stages of regional…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Outline thevarious stages of regional economic integration and the relationships between them. Discuss the levels of integration achieved within ASEAN, the CER group, the EU and NAFTA

Expert Solution

Step 1

The various stages of economic integration are :

Preferential Trade Agreement : It is the loosest form of economic integration. Here , preferences are given to the member countries against others.
Free Trade Agreement : The trade with the member countries will be free but not with the rest of the world. Here , All barriers are removed on trade among members but each nation retains it's own barriers to trade with the non-members.
Custom Union : It includes free trade among countries and also have a common policy with the rest of the world. It allows no tariffs or other barriers on trade among members. It harmonizes trade policies towards Rest of the world.
Common Market : It goes beyond custom union by allowing the free movement of labour and capital among members and having a common policy with rest of the world.
Economic Union: It includes the features of the common market along with the common monetary and fiscal policies of the member states.