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 following article takes a look at the benefits of regional economic integration.
1. Enhanced political cooperation
Several nations usually have a much larger political influence as compared to the influence that each individual country would have. This kind of integration is a vital strategy for addressing the issues of political instability and conflicts that might affect that particular region. Moreover, improved political cooperation due to regional economic integration is also vital for handling the economic and social challenges linked to globalization.
2. Creates trade
Member countries in a regional economic integration agreement have a wider choice of services and goods that were previously unavailable. They can also easily acquire products at lower costs following the removal or lowering of tariffs. This encourages more trade amongst member nations. Actually, the extra money got from purchasing cheaper products may be useful for buying even more goods and services.
3. Employment prospects
Since economic integration encourages trade liberation, market expansion and more increased investment to member nations, it creates employment prospects. People can be able to migrate from one nation to another for finding new jobs or earning higher pay. Industries that require mainly unskilled labor usually shift their production processes to the low wage nations within the regional cooperation.
4. Encourages economic growth
Economic integration not only leads to creation of new and better technology, but it also encourages economic growth. As the respective countries trade freely, their GDP increases and therefore improves their economies.
Nevertheless, regional economic integration usually requires that member nations give up their control over key policies such as trade, fiscal and monetary policies.