Regional economic integration takes place when countries come together in order to create free trade areas or custom unions as well as making common markets for the accessibility of trade (Venables, 2000). This kind of economic integration has been greatly debated upon because of the advantages and disadvantages that it brings as well as various countries perspective in its effects. The benefits of regional economic integration are characterized by trade gains, increased return and increased competition, and investments.
Trade gains happen when goods prove to be strong substitutes that enables regional trade agreements to cause the demand for third party goods to decrease that will eventually drive down prices. Increased return and increased competition also takes place when there is an enlargement in the market. A bigger market allows the existence of larger corporation with greater productivity efficiency and the increased competition it entails induces other firms to lower down their prices, expand sales, and reduce internal inefficiencies.
Lastly, open markets also bring foreign direct investments that would be beneficial as long as the incentives coming from foreign investors is not engaged in “tariff-jumping” (Southern African Regional Poverty Network, n. d. ). The effects of economic integration are also seen in the political realm. Participating in regional trade agreements gives the government the opportunity to pursue common policies together with other countries that are mutually beneficial. A country may also want to enter regional trade agreements in order to show the competitiveness of their country’s industry that will eventually attract investors.
It also gives insurance and security to member countries because of the idea that they are in the “same boat” if ever a problem may occur. Furthermore, this would also aid countries to participate in positive interactions and interdependency among each other (Southern African Regional Policy Network, n. d. ). The ideology of a particular country may or may not encourage economic integration and this is seen in their attitude towards Foreign Direct Investments (FDI). Some countries may see FDI as a means of capital in terms of the added employment and taxes that it would give.
This is seen in states which believe that the well-being of their country as well as its people could be achieved in a capitalist society like the United States of America. However, economic integration is resisted by some countries because of the idea that it increases homogenization of tastes and attitudes wherein the sense of ones’ identity is lost. Their identity as a country could be threatened by increase global integration (Zineldin, 1998). A good example is France; despite being a member of the European Union they are strongly advocating their protectionism policy because they want to uphold their sense of identity.
Their ideology is so strong that they are making policy which will discourage direct foreign investments in their country (Meunier, 1999). Economic integration has advantages as well as its disadvantages. A country’s participation in this global integration is dependent in many factors. Economic reasons are not only the sole basis in a country’s policy towards economic practices but their ideological beliefs also play a major role.
References Meunier, S. (1999). “France, Globalization and Global Protectionism”. Retrieved 24 May 2008, from www. princeton. edu/~smeunier/meunier-harvardces00. pdf. Southern African Regional Poverty Network. (2005). “ Regional Integration: Concepts, Advantages, Disadvantages and Lessons of Experience”. Retrieved 24 May 2008, from http://www. sarpn. org. za/documents/d0001249/P1416-RI-concepts_May2005. pdf. Venables, A. J. (2000). “International Trade: Regional Economic Integration”. Retrieved 24 May 2008, from www. econ. ox. ac. uk/members/tony. venables/regenc2. pdf. Zineldin, M. (1998 August). “Globalisation and economic integration among Arab countries”. Retrieved 24 May 2008, from http://www. hf. uib. no/smi/pao/zineldin. html.