1. Economic Integration
Victoria Rock
According to Investopedia, economic integration is an arrangement between different regions, marked
by the reduction or elimination of trade barriers with a purpose to reduce costs for both consumers and
producers and to increase trade between the countries taking part in the agreement. (Investopedia)
There are several advantages and disadvantages to economic integration. Two advantages are; trade
creation and employment opportunities. Trade creation allows for a wider selection of goods and
services, a lower cost after trade barriers are removed, and encourages more trade between member
countries. Employment opportunities in economic integration, motivates an extra savings into the
nation as well as generates additional job prospects for individuals as they shift from one nation to
another in the search employment. (College Accounting Coach)
Some disadvantages include trade diversion and national sovereignty. Trade diversion/ trade barriers,
diverts trade from a non-member country to a member country despite the inefficiency in cost.
National Sovereignty requires member countries to give up some degree of control over key policies.
The higher the level of integration means the greater the degree of control given up. (College
Accounting Coach)
When a country’s government commits to taking part in a local trade bloc, there are a number of
concerns that can catch small organizations off guard. These vary from, competition, shortfall of
workers, and the incapability to acquire superior quality goods. One advantage of a trade bloc is the
lessening of government participation in trade. Tariffs or import taxes could be made compulsory in
order to bring down the level of competition.
Government can help by trimming down the amount of imported products through quotas. Doing this
will still permit some of the products into the nation, while at the same time guaranteeing that
organizations inside the nation or bloc could still try to win. One useful method the government can
carry out is to make sure that short term finance matters are handled by establishing help provisions
and ensuring that facilities inside the nation go along in order to handle inadequacies.
Government needs to keep an eye on the way contribution inside a trade bloc influences organizations.
The minimum extent of government contribution may prove to be most appropriate. Trade blocs are
always being modified. Negotiations that a nation adopts in the short period to assist circumstances can
have enduring impacts on nations that might desire to contribute inside the bloc in upcoming times.
Reference
Economic Integration.(n.d.) Investopedia: Dictionary. Investopedia. Retrieved January 17,2012. from:
http://www.investopedia.com/terms/e/economic-integration.asp#axzz1jpt6Pn5z

2. College Accounting Coach.(October 3, 2008)The Advantages And Disadvantages of Economic
Integration. College Accounting Coach. Retrieved January 17, 2012.
from: http://basiccollegeaccounting.com/2008/10/the-advantages-and-disadvantages-of-economic-
integration/
Rosson, C., Runge, C. & Moulton, K. (n.d.).Preferential Trading Arrangements: Gainers and Losers from
Regional Trading Blocs. Southern Agriculture in a World Economy. Retrieved. January 16, 2012.
from: http://www.ces.ncsu.edu/depts/agecon/trade/eight.html