Economic integration is the combination of selected economies so as to trade freely among member countries.
Forms/stages of Economic Integration
Economic integration has the following stages:
1. Free Trade Area
It is the type of integration in which countries remove all the trade barriers, so as to trade freely among member countries, but each member country maintains the unilateral right to impose tariffs on goods from the rest of the world.
2. Customs Union
This is a type of integration in which member countries remove the trade barriers among themselves, but have common tariffs against the rest of the world.
3. Common Market
In this type of integration, member countries have customs union, hence allow a free movement of the factors of production from one member country to another member country.
4. Economic Union
In this type of integration, member countries, besides having a common market, establish joint institutions such as railways, roads, parliament etc.
5. Common Monetary Union
In this type of integration, member countries establish a common currency.