CHAPTER 13; ECONOMIC INTEGRATION International Trade & the World Economy;  Charles van Marrewijk CHAPTER 13; ECONOMIC INTEGRATION Introduction Types of regional economic integration Neo-classical theory of economic integration Regional trade agreements Regionalism and the new trade theory Europe and the European Union Future enlargement of the European Union Conclusions

CHAPTER 13; ECONOMIC INTEGRATION International Trade & the World Economy;  Charles van Marrewijk CHAPTER 13; ECONOMIC INTEGRATION Introduction Types of regional economic integration Neo-classical theory of economic integration Regional trade agreements Regionalism and the new trade theory Europe and the European Union Future enlargement of the European Union Conclusions

Introduction Jacob Viner (1892 - 1970) International Trade & the World Economy;  Charles van Marrewijk Introduction Jacob Viner (1892 - 1970)

CHAPTER 13; ECONOMIC INTEGRATION International Trade & the World Economy;  Charles van Marrewijk CHAPTER 13; ECONOMIC INTEGRATION Introduction Types of regional economic integration Neo-classical theory of economic integration Regional trade agreements Regionalism and the new trade theory Europe and the European Union Future enlargement of the European Union Conclusions

Types of regional economic integration International Trade & the World Economy;  Charles van Marrewijk Types of regional economic integration Preferential trade agreement (PTA); ACP countries Free trade area (FTA); EFTA, NAFTA Customs union; EEC Common market; EU Economic union; EMU

CHAPTER 13; ECONOMIC INTEGRATION International Trade & the World Economy;  Charles van Marrewijk CHAPTER 13; ECONOMIC INTEGRATION Introduction Types of regional economic integration Neo-classical theory of economic integration Regional trade agreements Regionalism and the new trade theory Europe and the European Union Future enlargement of the European Union Conclusions

Neo-classical theory of economic integration International Trade & the World Economy;  Charles van Marrewijk Neo-classical theory of economic integration Trade creation

Neo-classical theory of economic integration International Trade & the World Economy;  Charles van Marrewijk Neo-classical theory of economic integration Trade diversion

CHAPTER 13; ECONOMIC INTEGRATION International Trade & the World Economy;  Charles van Marrewijk CHAPTER 13; ECONOMIC INTEGRATION Introduction Types of regional economic integration Neo-classical theory of economic integration Regional trade agreements Regionalism and the new trade theory Europe and the European Union Future enlargement of the European Union Conclusions

Regional trade agreements International Trade & the World Economy;  Charles van Marrewijk Regional trade agreements COMESA countries

Regional trade agreements International Trade & the World Economy;  Charles van Marrewijk Regional trade agreements ASEAN countries

Regional trade agreements International Trade & the World Economy;  Charles van Marrewijk Regional trade agreements

CHAPTER 13; ECONOMIC INTEGRATION International Trade & the World Economy;  Charles van Marrewijk CHAPTER 13; ECONOMIC INTEGRATION Introduction Types of regional economic integration Neo-classical theory of economic integration Regional trade agreements Regionalism and the new trade theory Europe and the European Union Future enlargement of the European Union Conclusions

Regionalism and the new trade theory International Trade & the World Economy;  Charles van Marrewijk Regionalism and the new trade theory Using a Dixit-Stiglitz type model with the world consisting of many provinces which may form b trading blocs, welfare is non-monotonic

CHAPTER 13; ECONOMIC INTEGRATION International Trade & the World Economy;  Charles van Marrewijk CHAPTER 13; ECONOMIC INTEGRATION Introduction Types of regional economic integration Neo-classical theory of economic integration Regional trade agreements Regionalism and the new trade theory Europe and the European Union Future enlargement of the European Union Conclusions

Europe and the European Union International Trade & the World Economy;  Charles van Marrewijk Europe and the European Union

Europe and the European Union International Trade & the World Economy;  Charles van Marrewijk Europe and the European Union Establishing a common market (EEC treaty) with four freedoms: Free movement of goods (Cassis-de-Dijon case, 1979). Free movement of persons Free movement of services Free movement of capital The main institutions of the European Union are: The Council of the European Union The European Commission; The European Parliament; The European Court of Justice The European Central Bank (ECB)

Europe and the European Union International Trade & the World Economy;  Charles van Marrewijk Europe and the European Union Green circle: former EFTA Red star: potential EU member

CHAPTER 13; ECONOMIC INTEGRATION International Trade & the World Economy;  Charles van Marrewijk CHAPTER 13; ECONOMIC INTEGRATION Introduction Types of regional economic integration Neo-classical theory of economic integration Regional trade agreements Regionalism and the new trade theory Europe and the European Union Future enlargement of the European Union Conclusions

Future enlargement of the European Union International Trade & the World Economy;  Charles van Marrewijk Future enlargement of the European Union

Future enlargement of the European Union International Trade & the World Economy;  Charles van Marrewijk Future enlargement of the European Union

CHAPTER 13; ECONOMIC INTEGRATION International Trade & the World Economy;  Charles van Marrewijk CHAPTER 13; ECONOMIC INTEGRATION Introduction Types of regional economic integration Neo-classical theory of economic integration Regional trade agreements Regionalism and the new trade theory Europe and the European Union Future enlargement of the European Union Conclusions

There are many regional trade agreements (RTAs) in the world. International Trade & the World Economy;  Charles van Marrewijk Conclusions There are many regional trade agreements (RTAs) in the world. We also distinguish FTAs, customs union, common market, economic union. RTAs in general increase welfare through trade creation, but the discriminatory nature of an RTA may make the net welfare effect negative. Increased popularity of Regionalism rather than Multilateralism may be bad for the world economy. EU is most succesful and powerful economic integration scheme; many CEE countries want to join; EU’s political decision process needs to be revised.