Question

explain in details the differences between the different levels of regional economic integration.

Answer 1

The five levels of regional economic integration include from the lowest extent of integration to the highest which are 1) a free trade area, 2) customs union, 3) common market, 4) economic union, and 5) political union.

A free trade area allows all member countries to freely trade , without barriers ( labour , capital etc) amongst themselves, but then also allows each country to determine their own level of barriers against any nonmembers.

A customs union in addition to eliminating barriers among member countries, also determines the trade policy that all members will follow when engaging with nonmember countries. A common market combines both of the previous levels of regional integration and also includes the removal of barriers to the movement of labor and capital among members.

However, a common market is difficult to attain and can result in uneven benefits among member countries. "An economic union goes beyond the demands of a common market by requiring member nations to harmonize their tax, monetary, and fiscal policies and to create a common currency "

The highest level of regional economic integration comes in the form of a political union. This occurs when countries have gone through all the other levels of regional integration and then want to coordinate their political systems in regards to nonmember nation relations as well.