Economic Intergration

International Cooperation

A series of actions aiming to coordinate policies or join efforts to achieve common objectives in the international sphere.

Mutual Benefits

In international cooperation, both donor and recipient countries agree to cooperate to solve a problem, generating mutual benefits.

Globalization

The unification of world markets intensifying links and interconnections between states and societies.

Economic Integration

An economic arrangement involving the reduction or elimination of trade barriers and coordination of monetary and fiscal policies between regions or countries.

Free Trade Agreement

Agreement between countries reducing or eliminating tariffs on trade within their borders, promoting economic efficiency and scale.

Regionalism

Refers to movements or policies that focus on the interests of a particular region rather than the nation as a whole.

Independence Referendum

A vote where people in a region decide if they want to be independent from the country they are currently part of.

Old Regionalism

Early movements against centralizing nation-states, often conservative and aimed at preserving regional identity.

New Regionalism

Post-Berlin Wall era characterized by global integration trends and increased regional trade agreements.

Economic Liberalism

Ideology supporting a market economy with individual freedom, private property, and limited government intervention.

Trade Creation

The process where the formation of economic unions leads to increased trade between member states.

Protectionism

Policy protecting domestic industries from foreign competition through tariffs, subsidies, quotas, or embargoes.

Customs Duty

A tariff or indirect tax imposed on goods during international trade, usually calculated as a percentage of the goods' value, but can also be specific rates for certain products.

Types of Customs Duties:

Ad Valorem Duty

A percentage of the import value of goods.

Specific Duty

Based on units of measurement like quantity or weight.

Compound Duty

A combination of specific and ad valorem duties.

Quotas

Limits on the amount of a product that can be imported or exported.

License

Permission to import/export specific goods within a defined timeframe.

Product Standards

Regulatory standards ensuring quality in areas like food preparation, intellectual property, or materials production.

Exchange Control

Government restrictions on foreign currency for imports.

Voluntary Export Restraint (VER)

Self-imposed limits on exporting certain goods to other countries.

Government Subsidies

Financial aid provided by the government to support industries.

Administrative Obstacles

Bureaucratic hurdles that can hinder trade activities.

Free Trade

International trade without barriers, based on minimal state interference and free market principles.

Case for Protectionism:

Patriotism

Encouraging support for domestic industries over foreign ones.

Employment Argument

Belief that imports reduce domestic employment.

Infant Industry Argument

Protection for emerging industries.

Anti-dumping Argument

Preventing unfair competition from foreign producers.

Balance of Payments

Addressing deficits by boosting exports.

Case for Free Trade:

Gains from Specialization

Efficiency in production and exchange of goods.

Economies of Scale

Benefits from large-scale production.

Consumer Access

Lower prices and variety due to competition.

Competition Promotion

Preventing monopolies and encouraging market competition.

The Customs Union

A union eliminating tariffs internally while establishing a joint external tariff wall, combining free trade with protection.

Types of Discrimination in Tariff Theory:

Commodity Discrimination

Varied tariff rates for different goods.

Country Discrimination

Varied tariff rates based on the country of origin.

Effects of Customs Union:

Specialization according to comparative advantage.

Economies of scale.

Changes in terms of trade.

Efficiency changes due to foreign competition.

Impact on economic growth.

Trade Creation and Trade Diversion

Concepts related to the effects of customs unions on trade flows, where trade creation is favored over trade diversion.