Question

What national conditions contribute to the success of economic integration? Please explain

Answer 1

Ans. Three fundamental factors [national condition] have effected the process of economic globalization and are likely to continue driving it in the future. First, improvements in the technology of transportation and communication have reduced the cost of transporting goods, services, and factors of production and of communicating economically useful knowledge and technology. Second, the tastes of individuals and societies have generally, but not universally, favoured taking advantage of the opportunities provided by declining costs of transportation and communication through increasing economic integration. Third, public policies have significantly influenced the character and pace of economic integration, although not always in the direction of increasing economic integration. These factors have influenced the pattern and pace of economic integration in all its important dimensions. In particular, the three important dimensions of economic integration are; 1. through human migration; 2. through trade in goods and services; 3. through movements of capital and integration of financial markets.

Among the requirements for successful development of economic integration are "permanency" in its evolution[ a gradual expansion and over time a higher degree of economic/political unification]; " a formula for sharing joint revenues" [customs duties, licensing etc] between member states[e.g., per capita]; "a process for adopting decisions" both economically and politically; and "a will to make concessions" between developed and developing states of the union. A "coherence policy is a must for the permanent development of economic unions, being also a property of the economic integration process. Historically the success of the European Coal and Steel Community opened a way for the formation of the European Economic Community[EEC] whichinvolved much more than just the two sectors in the ECSC. So a coherence policy was implemented to use a different speed of economic unification [coherence] applied both the economic sectors and economic policies. Implementation of the coherence principle in adjusting economic policies in the member states of economic block causes economic integration effect. Above mentioned conditions are contributing the success of the economic itegration.