Question

What are the economic and political arguments for regional economic integration? Given these arguments, why don’t we see more substantial example of integration in the world economy?

Answer 1

In the contemporary era of globalization, economic integration has been brought by trade organizations such as the European Union (EU) or USMCA (United States, Mexico, and Canada Trade pact). Economic integration has the sole purpose of creating a common market by dismantling trade barriers among the member state. Further, bring about production efficiency and trade gains from exports.
From an economic point of view, economic integration brings more synergy and collaboration creating more trade. But on the other side, this might also result in the loss of one nation at the cost of others. For instance, Canada is witnessing a decline in trade with China due to the ongoing USA-China trade wars along with the restrictions imposed by the USMCA pact. Similarly in the political arena, with the rise of ultra-nationalism other member nations are losing market access. For instance, illegal Mexicans are cited as the culprit for all the economic mishappening in the United States. Sometimes a certain political ideology favors similar traits rather than an anta agonizing trait. For instance, communist or socialist nations block are least likely to trade with democratic nations' trade block.
Economic integration is losing its appeal because of the inherited instability within the system. There is no doubt that such a system has been successful in creating trade and a rise in GDP. But the benefit of development is not equally shared, for instance, the EU has been beneficial for Germany, France, Italy but on the other side, it has been harmful to Spain and Greece due to uncontrolled migration. Similarly in USMCA, the tariff imposed on the Canadian Dairy industry by the United States has strained the trading ties.