1. Bilateral/Multilateral/ Regional (Handout)
ECONOMIC INTEGRATION
Bilateral/Multilateral/ Regional
(Handout)

2. 6 main types but you only need to memorise 4 (in blue)
1) Preferential trading area
just for a few products
Trading blocs
2) Free Trade Area (FTA) eg
 problem of …………………………………..
(eg need “RULES of ORIGIN” 
3) Customs Union (with a “common external tariff” or other barriers)

3.  More and more integration
4) Common Market
+ free movement of labor (and capital)
UNIONS
5) Economic and Monetary Union eg
+Common currency; a budget and central bank harmonized taxation systems and fiscal and monetary policies and pensions etc
6) Full integration eg…………………………….

4. ISSUE ---- which is more likely?
TRADE CREATION
Is when there is more trade according to the principle of comparative advantage a more efficient allocation of resources and lower costs
TRADE DIVERSION
Is when trade is diverted from a lower cost (more efficient) producer, who is outside the bloc, to a higher cost (less efficient) producer inside the bloc

5. EVALUATION of trading blocs
Advantages
Disadvantages

6. EVALUATION of ECONOMIC/MONETARY UNIONS all the above PLUS
Advantages
Disadvantages

7. International Organizations
World Trade Organisation (WTO)
International Monetary Fund (IMF)
World Bank

8. World Bank FUNCTIONS EVALUATION
extend long-term loans (“soft” or concessional) to ELDC governments
Alleviate poverty in ELDCs
Add to infrastructure in ELDCs
Promote FDI (foreign direct investment) by private companies in ELDCs

9. World Trade Organisation (WTO)
FUNCTIONS…… for its member countries
EVALUATION
• to provide a forum for negotiating trade liberalization
• to monitor/regulate further trade liberalization
• to resolve trade disputes (eg on dumping) to increase the transparency of decision-making processes
• to help ELDCs benefit fully from the global trading system.

10. International Monetary Fund (IMF)
FUNCTIONS
EVALUATION
oversees the global financial system,
stabilize exchange rates
Help countries that experience difficulties making their international payments ie DEFICITS on current account of BOP
extending them short-term loans