The disadvantages of regional integration include limited fiscal capabilities, cultural centralization, creation of trading blocs, diversion of trade and surrendering some degree of sovereignty. Regional integration refers to various economic and political agreements that are formed between sovereign countries.Know More
Some examples of regional integration treaties include the Association of Southeast Asian Nations treaty, the European Union, the North American Free Trade Agreement and the Organization of Petroleum Exporting Countries.
Some regional integration treaties, such as the European Union, create a common currency, and this leads to fiscal crises. With regional integration, individual countries are not able to control the supply of their currency to meet their economic conditions. When a more powerful entity controls that currency, such as the euro, individual countries give up the power to control their currency, and this weakens their economy.
Regional integration leads to cultural centralization, which can result in the loss of unique cultures within a region. For instance, the European Union only considers a few languages as official means of communication, leaving out languages used by remote communities in Europe, such as Breton, Welsh and Frisian.
Most regional integrations tend to increase barriers against all nonmember countries, resulting in the creation of trading blocs. When trade barriers are created, countries divert trade to member countries regardless of the loss they are likely to incur. For instance, a member country stops trading with a nonmember country manufacturing goods at a cheaper price and opts for a member country manufacturing the same goods at a higher cost.
When regional integration treaties are formed, member countries are required to give up some powers over key policies, such as fiscal, trade and monetary policies.Learn more about Economics
According to the Regional Development Agencies Act of 1998, Regional Development Agencies were created to be the strategic driver of economic development and prosperity in their region. Their responsibilities were to further economic development and regeneration, promote business efficiency, promote employment, enhance skills of application and contribute to sustainable development.Full Answer >
Economic liberalization refers to those government policies which promote economic growth by opening up trade to international markets, extending the use of markets and lessening the restrictions and regulations placed on business. China, Brazil and India, three of the fastest growing transitioning economies, achieved their economic growth after their governments liberalized their approach to business. This has led some economists to believe that economic reform is of greater importance than political reform in developing economies.Full Answer >
The World Trade Organization ensures that countries that trade goods and services have a say in how trade is conducted on an international level, thereby promoting peaceful relations, stimulating global economic growth, lowering the cost of living for residents of many nations and creating challenges to governments that seek to gain an economic advantage through corrupt trade practices. The WTO generally encourages transparent government among its members.Full Answer >
The main objectives of the North American Free Trade Agreement, or NAFTA, include removal of barriers to trade, enhancement of fair competition, to open up more opportunities, provision of security, to easily solve disputes and to explore new ways of co-operation. NAFTA is an international agreement that was signed by the United States of America, Canada and Mexico in a bid to establish a trilateral relationship for prosperity of all the countries.Full Answer >