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Regional Integration Research Paper

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Chapter one
Introduction
1.1 General Overview
The volume as well as the impact of the international trade in the world economy has grown significantly during past few decades. The share if global trade in world GDP has increased up from 39 percent to 50 percent during 1985 and 2010 period.
Mainly, this change was occurred due to improvement in participation of devolving countries in global trade. This was clearly reflected by the fact that lower income countries experienced a shaper improvement in trade to GDP ratio (32 percent to 56 percent) during the period of 1985 and 2010. Today trade liberalization has become a general norm win the developing world, being having various degrees of success and levels. Birth of various trade agreements …show more content…

Since it is subjected to lot of tariff and non tariff barriers, consumer has to bear huge cost of even for essential items, especially for food items.

1.2 Background of the study
Regional integration can be defined in terms of three dimensions. (Teunissen, JJ, 1996)
1. Geographic scope: this represents number of countries involved in an agreement
2. Substantive coverage: sector or activity covered by the agreement (trade, labor, macro-policies, mobility, sector policies, etc.)
3. Depth of integration: This dimension reflects the degree of sovereignty a country is ready to surrender which is from simple coordination or cooperation to deep integration.

Enhanced regional trade can lead to bring down prices of many key commodities significantly by avoiding additional costs of imports such as tariffs, taxes, and other expenses from outside the region. For instance, certain estimates show that Pakistan stands to save between US$400mn and US$900mn on its import bill if it allows imports from India on several selected items replacing its present imports from other countries at higher costs (Qamar, …show more content…

David Hume has pointed out (political Discourses, 1752) a general flaw in merchantilistic way of trade. He states that a continuous inflow of earnings from exports can lead to a situation where more money in will be in circulation in the domestic market than is needed to clear the total commodities and services available for purchase.
Adam smith proposed a new way for trade (An inquiry in to the nature and causes of the wealth of Nations, 1776) which is well known as the absolute advantage theory. The merchantilistic theory was replaced by this theory by stating that if countries allocate their productive and scare recourses to produce those goods which are best and thereafter trade their surpluses within the countries, it is possible for consumers in each country to consume more of that all goods. This system enables consumers to be benefited not only from greater quantities available for consumption, but also by having the luxury of choosing the best quality products through wide range at the lowest possible

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