Describe five forms of economic integration that countries may join to promote international trade

Describe five forms of economic integration that countries may join to promote international trade. (10 marks)

25/11/2020

Forms of economic integration that countries may join to promote international trade include:

Preferential Trade Area.
In this form of integration, trade barriers are reduced among the member nations while the barriers are applied at normal rates for trading activities with non-member nations.
Free trade area.
This is economic integration where all trade barriers are removed between the member countries while each country retains its own barriers towards non-members.
Customs union.
In this form of integration, tariffs and other trade barriers are removed between member countries while their trade policies are harmonized with regard to treatment of trade with the rest of the world.
Common market.
This integration goes beyond harmonizing trade policies and removal of trade barriers but also allows for free movement of labour and capital among member nations.
Economic union.
In this form of integration, member countries set up common institutions like central banks, adopt use of common currency (monetary system) and have common public services like railways network.
Duty-free zones.
Member countries allow importation of raw materials without charging duty. Exports from these zones to member countries also attract no excise duty.
Political union.
In this form of integration, several states form a central government through which, share a central bank, the defense and core ministries that run their affairs.