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Economic Integration (Trading bloc (Types (Customs Union (A group of…

- - - - A group of countries that remove trade barriers between themselves and adopt common external tariffs and quotas towards non-member countries
      - Act as a group in trade negotiations and agreements with non-members
      - eg. EU-turkey
    - - Countries who have formed a Customs Union remove remaining trade barriers
      - Restrictions on movements on FOPs are eliminated
      - CARICOM
    - - A group of countries that agree to gradually eliminate trade barriers between themselves
      - eg. NAFTA
  - - - Increased competition
      - Increased choices and lower prices for consumers
      - Expansion into larger markets
      - Spread of technology
      - Increased bargaining power during trade
      - Increased investment
      - CM: allocative efficiency, less unemployment
    - - Unequal distribution of gains and losses
      - FTA: external countries re-export within FTA
- - - - Eliminates exchange rate risks and uncertainty
      - Eliminates transaction costs
      - Promotes high level of inward investment
        
        Inward investment: investments from outsiders to member countries
      - Encourages price transparency
    - - Reduction in economic sovereignty
        
        Unable to use monetary policies as a tool to influence individual economy
        
        Single monetary policy may be inappropriate
        
        Individual exchange rates cannot be altered to boost international competitiveness
        
        Limited ability to borrow to finance fiscal policies
        
        Due to caps on public debt and budget deficit (EU)