Section 3.4 Economic integration - notes
In this section we will look at the various forms of economic integration including preferential trading agreements, trading blocs and monetary union.
By the end of this section you should be able to:
- Distinguish between bilateral and multilateral (WTO) trade agreements.
- Explain that preferential trade agreements give preferential access to certain products from certain countries by reducing or eliminating tariffs, or by other agreements relating to trade.
- Distinguish between a free trade area, a customs union and a common market.
- Explain that economic integration will increase competition among producers within the trading bloc.
- Compare and contrast the different types of trading blocs.
- Explain that a monetary union is a common market with a common currency and a common central bank.
- Discuss the possible advantages and disadvantages of a monetary union for its members.
- Explain the concepts of trade creation and trade diversion in a customs union.
- Explain that different forms of economic integration allow member countries to gain from economies of scale.