Economic integration refers to the process of increasing economic interdependence and cooperation between countries through reducing trade barriers and harmonizing policies.
Forms of Integration:
- Free trade areas like NAFTA lower tariffs but retain individual external trade policies.
- Customs unions like the EU implement a common external tariff in addition to intra-bloc free trade.
- Monetary unions such as the Eurozone adopt a shared currency to strengthen economic and financial links.
Example Impact:
By joining the ASEAN Economic Community, members capitalized on preferential access to its 600 million consumers combined with reduced risk of politicized trade retaliation.
Key Benefits:
Increased integration stimulates competition, economies of scale, and specialization. However, policy alignments must consider diversity carefully to balance national autonomy and regional cohesiveness.