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Stages of economic Integration
1
An example: The European Union
Preferential Trading Area: Treaty of Paris (1951), formation of ECSC
Free-Trade Area: Treaty of Rome (1957),
creation of EEC
Customs Union: European Union Customs Union (1958), achieved in 1968
Common Market: Single European Act (1987), effective in 1993
Economic Union: Treaty of Maastricht, 1992
Economic and Monetary Union: common currency in circulation in 2002 (Euro €)
Complete Economic Integration: not yet achieved
7 stages of economic integration
1st stage: Preferential trading area
Based on a Preferential Trade Agreement (PTA)
Reduction (and not abolition) of tariffs on certain products between two or more countries.
2nd stage: Free-Trade Area
6th stage: Economic and Monetary Union
Based on a Free-Trade Agreement (FTA)
Abolition of tariffs between the participating countries
Each country retains its own tariffs against non-members
Economic union (common market and customs union) with a monetary union
7th stage: Complete Economic/Political Union
Unification of monetary, fiscal, social, and counter-cyclical policies
Establishment of a supra-national authority whose decisions are binding for the member states.
3rd stage: Customs Union
The USA are an example of a total economic integration
5th stage: Economic Union
Free-trade area with a common external tariff
Common Market + Customs Union
Suppression of restrictions on commodity and factor policies
Remove discrimination due to disparities in these policies"
Definition
4th stage: Common Market
Total free movement of the factors of production, goods and services
- Preferential trading area
- Free trade area
- Customs union
- Common market
- Economic union
- Economic and monetary union
- Complete economic/political integration
Bibliography
Bela Balassa: The Theory of Economic Integration, 1961
Economic integration: process or state of affairs
As a process: measures designed to abolish discrimination between economic units belonging to different national states
Bela Balassa, The Theory of Economic Integration, 1961
Liviu C. Andrei, The economic integration: concept and end of process, 2012
http://homepages.ulb.ac.be/~mcincera/cours/eie/NC1.PDF
https://www.economicsonline.co.uk/Global_economics/Economic_integration.html
As a state of affairs: various forms of discrimination between national economies.
Cooperation ≠ Integration