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In: Economics

Discuss 3 beneffits and 3 drawbacks of regional integration. ( 3 substantive paragraphs)

Discuss 3 beneffits and 3 drawbacks of regional integration. ( 3 substantive paragraphs)

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Expert Solution

Benefits
1) Trade opportunities - The regional integration helps removes any existing tariff and the ease in doing business helps in passage of good. The market opens up to new source, and more opportunity to expand their business. The regular inflow of products and more options will ultimately help consumers with a fair price due to competitions..
2) Economic Growth & employment - Economic integration between two region ensures that the business cycle will be as usual between them. In case of a slow down in economy, this constant flow will act as balancing the trade deficit and thus contributing to the GDP. The integration also opens up the possibility of migration of people for job opportunity.  
3) Political Co-operation - The economic ties plays a vital role in maintaining political relation between the countries. Generally smaller economies depend on bigger economies to fulfill their resource and in the time of emergency. This economic assistance is vital whenever a country needs support at global level.

Drawbacks
1) Trade Diversion & Block - These treaties are generally signed by regions who are just opening up to global markets. This often leads to limited opportunity as the nations outside the treaties might not get the same preference. In a way this a challenge to open market and can lead to monopoly of trade block.
2) Cultural Centralization - The integration breaks down the exclusiveness of a region. A product once known for its rarity suddenly becomes available everywhere. The sudden availability decreases the value and the business that were initially the only one in the sector, has no buyer.
3) Affect to the market - A company operating in a small region with less operating cost can move its factory to the other region with higher operating cost due to extra tax relief and ease of setting up.This movement helps in business saving enormous amount due to special economic relief. However, this also put adverse effect on market as the products become expensive due to this extra movement and increase in operating cost of the company.


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