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Do you want to know the basic features that make one form of international economic cooperation different from the others?
Maybe you are not familiar with the names of the various types of international Economic cooperation.
We are talking here about forms of international economic cooperation or integration like Free Trade Area, Customs Union, A Common Market, Economic Union and A Complete Economic Integration.
But your examiners at the West African Examinations Council do not really put your lack of awareness in this matter into consideration as they prepare your WASSCE questions.
Neither do they care when it comes to other similar examination questions on Economics.
So you have no other choice but to educate yourself. You must know the differences between the types of international economic cooperation.
I have decided to give you an easy-to-understand explanation of the major types of international economic cooperation.
You only need to know the most important features of the various forms of economic integration or cooperation.
I have, therefore, taken my time to assemble just that for you. They will help you to provide only the relevant points during your examination.
The Meaning of Economic Integration
Economic cooperation or integration is the deliberate act of governments to pool their economic resources in other to achieve a greater efficiency in the production of goods and services for the social and economic welfare of their countries
1. Free Trade Area (FTA)
MEANING: A Free Trade Area is by far the simplest form of economic integration as all barriers to trade among members are removed but each member state retains its own barriers to trade with non-member nations. In other words, there are no common external tariffs. Also, there is no loss of political sovereignty.
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2. Customs Union
MEANING: A Customs Union is a grouping of countries within which tariffs or other barriers to trade among members are abolished ( as in a Free Trade Area) but in addition has common external tariffs and other barriers on imports from non-members.
3. A Common Market
DEFINITION: A common market refers to a grouping of countries within which there is free movement of both goods and factors of production and creation of common tariffs wall against outsiders or non-members.
4. Economic Union
DEFINITION: An economic union refers to a grouping (i.e. integration) of countries within which there is free movement of both goods and factors of production. There is also the creation of a common tariff wall against outsiders or non-members and, in addition, the adoption of common social, economic, political and financial decisions such as the setting up of a common parliament and a common currency for member nations.
5. A Complete Economic Integration
DEFINITION: A complete economic integration refers to a grouping of countries within which there is free movement of both goods and factors of production and the creation of a common tariff wall against non-member states and, in addition, the adoption of common social, economic, political and fiscal policies with a supra-national authority whose decisions are binding on all member states. An example is the European Union (EU)