What Is Regional Economic Integration? As the EU experience shows, a single currency isn’t necessarily key to unlocking the benefits of economic integration, writes Iwan Azis. Freedom of movement; Free trade area; Globalization The Impact of Regional Integration on Economic Growth and Development: A Case Study of the East African Community(EAC), 2001-2010 John Magufuli, the president of Tanzania, is the EAC chairman. In September 2018 a committee was formed to begin the process of drafting a regional constitution and this is likely to be a very big milestone for regional values and practices in governance and leadership. In case of economics similar concept is there which is called economic integration where many countries of the same region come together by eliminating trade barriers between the countries and aligning their monetary and foreign policies to benefit the whole region. Next month the UK goes to a referendum to decide whether it stays in the European Union or not. The aim of this essay is to critically analyse regional integration, demonstrating advantages, disadvantages and the effect it has on member states involved. It is mainly trade-driven, and is a process that involves increasing … Why did the EU form and what are its significant impacts? The deeper integration of regional markets through the elimination of non-tariff barriers can reduce trade and operating costs. Regional integration is an arrangement where countries in the same region enter into an agreement to enhance economic cooperation through agreed institutions and rules, focused on removing barriers to free trade in the region, increasing the free movement of people, labour, goods, and capital across national borders. Economic Benefits of Regional Integration to Member States, The top five most important African elections to watch in 2021, Clergy Dismiss Arch Bishop Lwanga’s Suggestion to Postpone Elections, East Africa: We Either Integrate Or Collapse, Ingrid Turinawe, Winnie Babihuga Kicked out of FDC, Drug addicts have no moral claim to leadership – Museveni, Museveni in Africa’s Eyes: Great Statesman Championing Peace in the World, Security Minister Warns Protesters, ‘We Will Change Tactics Based on Situation’, strengthening of trade integration in the region, creation of an appropriate enabling environment for private sector development, development of infrastructure programmes in support of economic growth and regional integration. In order to have a better idea about this concept, one should look a… In the case of both the European Union and the East African Community there are three outstanding benefits that regional integration can bring. Regional integration is essential here as well, since goods, services and people need to be able to flow seamlessly across borders to reduce costs and to help firms become competitive enough to link to these value chains. Voting Bobi Wine is Like Accepting Brain Surgery by a Senior Four Student, How Political Violence in Uganda Can be Stopped, Uganda: The Fight to Control Her Narrative. What are the pros and cons of Regional integration? Regional integration arrangements are mainly the outcome of necessity felt by nation-states to integrate their economies in order to achieve rapid economic development, decrease conflict, and build mutual trusts between the integrated units. May 12, 2010, C Kapoor, 4 Comments. A. Venables, in International Encyclopedia of the Social & Behavioral Sciences, 2001. Free trade area. 169 Economic integration in the form of regional markets for goods, services, capital and labour, including common standards and lower reciprocal customs barriers, will create larger and more interesting markets for both African and international investors and manufacturers. The European Union is an economic and political union of 27 member nations which are located in Europe. Benefits: Creation of trade and more jobs. Small economies often lack the resources to make large public investments. Regional integration has been defined as the process through which independent national states “voluntarily mingle, merge and mix with their neighbors so as to lose the factual attributes of sovereignty while acquiring new techniques for resolving conflicts among themselves.”. AN INDEPENDENT STUDY ON THE POTENTIAL BENEFITS OF THE AFRICAN CONTINENTAL FREE TRADE AREA (AFCFTA) ON NIGERIA 4 Regional integration is inevitable for economic transformation and sustainable socio-economic development in Africa. Advantages and Disadvantages of Regional Integration in Business 1200 Words | 5 Pages. , Erwin Z, 1 Comment, March 5, 2016 Regional integration leads to cultural centralization, which can result in the loss of unique cultures within a region. Regional economic integration has enabled countries to focus on issues that are relevant to their stage of development as well as encourage trade between neighbors. 2. The nation-state system, which has been the predominant pattern of international relations since the Peace of Westphalia in 1648 is evolving towards a system in which regional groupings of states is becoming increasingly important vis-a-vis sovereign States. The EU integration Posted in Miscellaneous. , Harri Daniel , 1 Comment, Benefits of Regional Economic Integration. These agreements are usually made between nations with smaller economies in order to promote trade within the region. It … The Asian RCI approach has been more It has achieved a new meaning and new significance. multiple benefits derived from implementing electric market integration. Encourages economic growth 6. The deeper integration of regional markets through the elimination of non-tariff barriers can reduce trade and operating costs. Where it all started . Especially if the business is growing rapidly. Actually, the extra money got from purchasing cheaper products may be useful for buying even more goods and services. September 22, 2015. by Kizito Sikuka – SANF 15 no 51 The benefits of belonging to a shared community in southern Africa are reaching the lives of many people in the region, according to a new publication released by the Southern African Development Community. Benefits Of Economic integration. December 15, 2014 . Free trade area. 4. The deep integration that focuses on regulating the business environment in a more general sense is faced with many difficulties. Reaping the benefits of regional integration. Intra-regional trade refers to trade which focuses on economic exchange primarily between countries of the same region or economic zone. Regional economic integration has enabled countries to focus on issues that are relevant to their stage of development as well as encourage trade between neighbors. The World Bank Group helps its client countries to promote regional integration through common physical and institutional infrastructure. Some of the advantages are, * Foreign Direct Investments (FDI) stimulates economic growth through the sharing of technology, marketing channels, managerial know-how and to … integrated region by running a parallel Gravity Model for the 15 core countries of the European Union. The president has always been vocal when it comes to the issue of the regional integration and we have seen a lot of effort at the high level to actualize this concept. Political differences have occasionally triggered off misunderstandings that have led to de-integration, as was the case of the Colonial EACM (CEACM) in 1978. In 2008, after negotiations with the Southern Africa Development Community (SADC) and COMESA, the EAC agreed to an expanded free trade area including the member States of all three organizations. The EAC aims at widening and deepening co-operation among the partner States and other regional economic communities in, among others, political, economic and social fields for their mutual benefit. Integration timeline West Indies Federation • 1958 to 1962 (British Caribbean Federation Act) • First and only attempt at … There are four main types of regional economic integration. The following are some of the important definitions of economic integration. Moreover, integration can improve regional security, because the expansion of international trade often correlates with a reduction of conflict. Besides the European Union, other trade-related regional integration policies include numerous agreements in Africa: for example, the Southern African Customs Union Agreement, the Multilateral Monetary Agreement and the Indian Ocean Commission. Another advantage of regional integration is that the effect of a large market will increase global competitiveness. The EAC is a potential precursor to the establishment of the East African Federation, a proposed federation of its members into a single sovereign state. The healthy effects of such a regional economic integration are presumed to be as follows: 1. In addition not only allows economic output to increase internally, it also create an advantage in relation to other … Conflict is replaced by constructive dialogue. 3. It could have as its objective political or economic goals or in some cases, a business initiative aimed at broader security and commercial purposes. The organisation was founded in 1967, collapsed in 1977, and was revived on 7 July 2000. There are many degrees of economic integration, but the most preferred and … Poland's accession to the EU proves the economic and political benefits of deeper integration, may mitigate fears of marginalisation and domination by regional hegemons, and can disperse concerns over lost sovereignty. Economic integration not only leads to creation of new and better technology, but it also encourages economic growth. For instance, the European Union only considers a few languages as official means of communication, leaving out languages used by remote communities in Europe, such as Breton, Welsh and Frisian. Looking further ahead, the U.S. can support the various building blocks of regional integration that will ultimately form a more comprehensive and institutionalized framework for regional integration. , Erwin Z, Comment Closed. There hasn’t been a war between members of the European Union since it was created. Please help us improve. Regional economic integration refers to the agreement amongst countries within a certain geographic area for reducing and ultimately removing tariff barriers, making sure there is better flow of services or goods through the respective nations. President Museveni in his recent end of year speech highlighted about nine thematic areas on which his government is going to put emphasis in 2019 and called upon everyone to direct efforts towards these areas, and one of the thematic areas was regional integration, where he said that he will show the need for common market by working with the people within the regional blocks to consolidate the unity of East Africa and then work through the Common Market for Eastern and Southern Africa (COMESA) and the African Union (AU) to build the African common market. Pierce, Trebilcock and Thomas (2006) analyzes the effects of greater regional integration of electric markets and conclude that greater integration has the potential to improve the performance of Employment Opportunities: As economic integration encourage trade liberation and lead to market expansion, more investment into the country and greater diffusion of technology, it create more employment opportunities for people to move from one country to … Benefits of wider market, Increased trade, Investment and; Economic efficiency motivates formation of regional economic groupings, also known as economic integration. Cons: Lowers sovereignty, shift of employment, inefficient trade diversion from productive exporters to less capable exporters. Member countries in a regional economic integration agreement have a wider choice of services and goods that were previously unavailable. capital and labour) across national borders within the integration area (EAC 2000). The objectives of the agreement could range from economic to political to environmental, although it has typically taken the form of a political economy initiative where commercial interests are the focus for achieving broader socio-political and security objectives, as defined by national governments. An arrangement for enhancing cooperation through regional rules and institutions entered into by states of the same region. On one hand, it is a development strategy aimed at aggregating Africa’s small countries into one large SADC Success Stories reveals that the regional integration agenda … Encourages a greater consensus, and allows for political cooperation. 3 Theoretical arguments and historical experience suggest that nondiscriminatory free trade is the “first best” policy option, both from global and individual country perspectives. , Erwin Z It is also a process in which neighboring states enter into an agreement in order to upgrade cooperation through common institutions and rules. adjacency or “neighboring” benefits of nearby economies. Regional integration is essential here as well, since goods, services and people need to be able to flow seamlessly across borders to reduce costs and to help firms become competitive enough to link to these value chains. They can also easily acquire products at lower costs following the removal or lowering of tariffs. with regional cooperation reveals a few interesting observations. , Erwin Z, Comment Closed, March 15, 2016 Advantages and disadvantages of regional integration Introduction The chosen trading bloc is the EU. Customs union – a free trade area in which members impose common tariffs on non-members and members may also cede sovereignty to a single customs administration (EAC 1999). Regional integration initiatives, also has at least the following eight important functions: By supporting this initiative not only will we achieve the above mentioned but we will have shared prosperity, peace and security as the people of the region in relation to the democratic peace theory suggestions, which has enabled the Europeans to avoid or deal with regional conflicts and forge a shared wealth for its citizenry and we should all support the president of Uganda and his counterparts in the region for this to be realized because we win or lose together as the people of the region. Regional economic integration has enabled countries to focus on issues that are relevant to their stage of development as well as encourage trade between neighbors. Integration of Western Europe has been motivated primarily by political considerations. The benefits of regional integration may have been oversold, while the costs have been ignored. development of strong public sector institutions and good governance; reduction of social exclusion and the development of an inclusive civil society, contribution to peace and security in the region, building of environment programmes at the regional level, strengthening of the region’s interaction with other regions of the world. Chapter 10 The importance of regional integration for African development. Benefits: Creation of trade and more jobs. Regional economic integration occurs when countries come together to form free trade areas or customs unions, offering members preferential trade access to each others' markets. Regional integration helps countries overcome divisions that impede the flow of goods, services, capital, people and ideas. CARICOM Competition Commission . Some scholars see regional integration simply as the process by which states within a particular region increase their level of interaction with regard to economic, security, political, or social and cultural issues. Regional integration arrangements are a part and parcel of the present global economic order and this trend is now an acknowledged future of the international scene. Small economies often lack the resources to make large public investments. De Lombaerde and Van Langenhove describe it as a worldwide phenomenon of territorial systems that increases the interactions between their components and creates new forms of organization, co-existing with traditional forms of State-led organization at the national level. Natural resources management, particularly in the extractives industry, can make a meaningful contribution to a country’s economic growth when it leads to linkages to the broader economy. Benefits of Regional Economic Integration Regional economic integration refers to the agreement amongst countries within a certain geographic area for reducing and ultimately removing tariff barriers, making sure there is better flow of services or goods through the respective nations. The EAC is an integral part of the African Economic Community. The degree of integration depends upon the willingness and commitment of independent sovereign States to share their sovereignty. First, regional integration is an important building block in deterring violent conflicts between nations. Regional integration is a process in which countries enter into a regional agreement in order to enhance regional cooperation through regional structure and rules. These divisions are a constraint to economic growth, especially in developing countries. Purchasing cheaper products may be useful for buying even more goods and services divisions are a to... 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