Economic integration refers to the trade agreements between nations that lead to the removal of trade barriers and cooperation between countries. The formation of regional economic integration is affected by the political and economic argument that is for or against trade cooperation. Understanding the economic and political arguments of economic integration is vital to know the reason for the substantial decline in the number of economic integration.
Regional integration has a significant impact on the economy. Trade cooperation creates a new market for goods and increases competition leading to the elimination of monopolies. As a result, consumers enjoy lower commodity prices. Regionalism allows for the free mobility of factors of production, and this facilitates the aggregate increase of wealth in a regional trade block. Moreover, economic integration leads to trade diversion that allows the countries to increase their imports.
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Political arguments are also in favour of economic integration. The formation of economic integration encourages the formation of political cooperation between countries due to the development of a dependent relationship between the nations. Besides, the countries work towards reducing the rate of violent clashes between the nations. In spite of the strong economic and political arguments of economic integration, the associations are less popular because the countries are unwilling to give up their sovereignty and economic independence.
Global Business Events
Since UK’s revolutionary vote to exit the European Union, there has been a lot of speculation about how the move will affect the country’s economic performance. It is expected that Brexit will significantly increase the cost of living in the UK as imports become more expensive due to the re-introduction of trade tariffs (O’Carroll, 2018). I agree with this argument, as people living in Britain will have to spend more money to afford commodities that were previously sold at a low price.
Reference
O'Carroll, L. (2018). Brexit to have greatest negative impact on regions outside London. Retrieved from https://www.theguardian.com/politics/2018/jul/04/brexit-greatest-negative-impact-regions-outside-london
