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Essay About Economic Integration

2753 Words12 Pages

Chapter 1
Introduction and Background
“All countries, including the poorest have assets – human, industrial, natural financial - which they can employ to produce goods and services for their domestic markets or to compete overseas. Economics tells us that we can benefit when these goods and services are traded. Comparative advantage allows countries to prosper first by taking advantage of their assets in order to concentrate on what they can produce best, and then by trading these products for products that other countries produce best. Liberal trade policies — policies that allow the unrestricted flow of goods and services — allows countries to sharpen competition, motivate innovation and breed success.” -World Trade Organization (The World Trade Organization n.d.)

In recent decades the international trading system has seen a dramatic increase in the number of Free Trade Agreements (FTA). Globalization not only managed to bring the world closer together but it also increased the average FTA partner a country has on average. While in 1991, a country had an average of 1.8 FTA partners, the amount of FTA partners had five-folded to an average of 9.9 FTA partners in 2005. As economic interdependencies increases, countries are starting to shift their …show more content…

Economic integration can take on many forms, all of which represent various degrees of integration. These can be free trade areas, customs unions, common markets, economic union and complete economic integration. The main aim of a free trade area is to reduce barriers to exchange so that trade can grow as a result of specialization, division of labor, and comparative advantage. In short, to lower the prices for distributors and consumers while aiming to increase the economic productivity in all the member

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