Theory of Economic Integration

In this article, we will try to define the term "economic integration". There will also be some conflicting views on the means and objectives of integration and the likely impact of this development.

What is Economic Integration? Economic integration refers to international economic integration and is defined as eliminating discrimination between the economic units of different countries. This discrimination originated from the existence of independent national economies; it manifested itself in the form of customs duties, trade and exchange rate restrictions, obstacles to factor mobility, the pursuit of national monetary and financial policies etc. The various types of integration, such as free trade zones (e.g. customs duties between the participating countries, are abolished, but each country retains its own customs duties against non-members', a so-called customs wall against third countries.), customs associations, common markets, economic communities, and total economic integration, are examined in terms of what type of discrimination has been eliminated. Furthermore, the connection between the theory of economic integration and location theory is discussed. `Dirigistic` and `liberal` conceptions of economic integration are sorted. It is believed that despite the need to expand government interventions in some sectors, such as regional development, the expansion of the economic area will lead to increased competition and thus less government influence at the company level.

There are various arguments raised against the creation of regional economic unions. In essence, these are the alleged superiority of multilateral global agreements, the possible effect of trade diversion and the possible creation of protectionist protection areas. On the one hand that with regard to the current institutional framework for world trade, universal world free trade is an unrealistic solution. Furthermore, it is stated that in the case of neighboring countries, the trade-creating effect of an economic community will predominantly outweigh the trade-redirecting effect and that protectionist tendencies will probably not prevail in Europe, they target in Latin American countries.

--Sinan BULUT