Team Members

Serial Name Identification Number

1 Utsha Paul 20133014

2 Md. Abid Hasan Anik 20133015

3 Md. Delor Hossain 20133016

4 Mohammed Jonaied Alam Chaion 20133017

5 Md. Siam Hosen 20133019

6 Himel Saha 20133021

7 Sagor Ahmed 20133022

Regional Economic Integration
 UTSHA PAUL
ID No: 20133014
Regional Economic Integration
Levels of Economic Integration

1 Free Trade Area

2 Customs Union

3 Common Market

4 Economic Union

5 Political Union
Md. Abid Hasan
Anik
ID: 20133015
Trade Creation and Diversion
 Trade Creation
When tariff agreements causes imports to shift from higher cost
countries to lower cost countries.

Malaysia(2000)

Bangladesh Indonesia(3000)

Guatemala (1500)
Malaysia (10%)=2200
Indonesia (10%)=3300
Guatemala (50%)=2250
 Trade Creation

> FTA?
> Occurs?
> Movement?
> Increase?
 Trade Diversion

When tariff agreements causes imports to shift from higher cost

countries to lower cost countries.

Malaysia(2000)

Bangladesh Indonesia(3000)

Guatemala (1500)
Malaysia (50%)=3000
Indonesia (50%)=4500
Guatemala (50%)=2250
 Trade Diversion

> Occurs?
> Movement?
> loss of consumers welfare
> loss of global efficiency
Trade-creating Effect of Customs Union in Bangladesh
Trade Diversion Effect of Customs Union in Bangladesh
Md. Delor Hossain
ID:20133016
Benefits of Regional Economic Integration

Economic integration refers to the collaboration of two or more countries to

limit or eliminate trade restrictions and encourage political and economic
cooperation

Benefits

 Inter-Commodity Substitution
 Trade Deflection in a Free Trade Area
 Dynamic Effects
 Collective Self-reliance
 Increased Foreign Direct Investment
 Inter-commodity substitution

Inter-commodity substitution refers to the

phenomenon where consumers switch from
one good to another in response to changes Soybean oil Palm oil
in relative prices of goods.
 Trade Deflection in a Free Trade Area

Trade deflection refers to goods produced in a third country entering a free trade area through
a member country having lowest tariff.

For example, China exports goods to the United States through Mexico. The goods are first
shipped to Mexico, where they are assembled or processed before being shipped to the United
States. This is done because Mexico has a free trade agreement with the United States, which
allows Mexican goods to enter the US market at lower tariffs than Chinese goods.
 Dynamic Effects

01 Widening of the size of the market

02 Economies of scale

03 External economies

04 Growing competition

05 Technological change
 Dynamic Effects
Besides the issue of trade creation, trade diversion, and trade deflection, which are all
more or less of static nature, there are some dynamic benefits from regional grouping.
The dynamic benefits include the gains arising from
• Widening of the size of the market: Regional grouping can lead to an increase in
the size of the market, which can help businesses grow and expand their customer
base.
• Economies of scale: When businesses produce goods or services on a large scale,
they can often do so more efficiently and at a lower cost per unit.
• External economies: These are benefits that arise from factors outside of a
business, such as access to skilled labor or infrastructure.
• Growing competition: Regional grouping can lead to increased competition
between businesses, which can help drive innovation and improve quality.
• Technological change: Regional grouping can help facilitate the transfer of
technology between countries, which can help businesses become more efficient
and productive.
Mohammed Jonaied Alam Chaion
ID Number: 20133017
 Collective Self-reliance
Collective Self-reliance

Movement of Harmonization No depend on

Intra Region
Trade
Factors of of Economic wishes of
Production Policies other countries

 Collective self-reliance refers to the ability of member countries within a regional

grouping to develop independence and strength by promoting intra-region trade,
facilitating the movement of factors of production, harmonizing economic policies and
reducing dependency on outside countries.
 Increased Foreign Direct Investment
Foreign Direct Investment (FDI) refers to the investment
made by a company or individual from one country (the
home country) to another country (the host country).

Regional Economic Integration has a positive impact on

foreign direct investment (FDI). Economic integration
creates a larger market and greater demand, leading to
increased FDI flows both within and between blocs.

Country 1992-1994 2004-2006

Bulgaria and Romania both countries are member of
European Union. UNACTAD FDI Performance Index of Bulgaria 92nd 7th
Bulgaria & Romania Romania 101st 21st
 Increased Foreign Direct Investment
Six different motivations behind increased FDI

Available Technology Incentives to foreign investor Access to new product range

Avoid Tariff barrier To meet product demand

Secure access to customer
 Polarisation Of Benefits

Polarisation of benefits refers to the situation

where the benefits of economic integration, such as
increased trade and industrial growth, tend to
concentrate in certain regions or sectors, while
other regions or sectors experience little to no
growth or even decline.

Economic integration can reduce inequality in ANDEAN Pact Report of 1960-1970

income and wealth by equalizing factor prices. But
Population Income
due to the introduction of monopolies, unequal
exchanges, increasing import cost which 40% 9-13 %
contribute to intra-region inequality. As an 5% 40%
Example of polarization of benefits:-
 Himel Saha
ID: 20133021
 European Case
Early Attempts: The first exercise towards economic integration was
made in 1948 when the Organization for European Economic
Cooperation (OEEC) was established for the purpose of administering
the Marshall Plan aid meant for the reconstruction of the war devastated
economy. In 1952 six European countries formed European coal and
steel community . The purpose was to establish a common market for
coal and steel among the member countries. Six Countries are:-

Germany Italy France

Netherlands Luxembourg
Belgium
 European Union
European Union is an economy and Political union of most of the countries of the European
continent. The number of member states of the European union is 27.it was established in
1993.It was basically a common market that had a customs union along with a provision for
free internal movement of good, service, labor and capital. The Size of EU is increased In
2004 when ten new countries joined it.

Objective
 Promote Peace, it values and well being of its
 freedom security and Justice without internal bonder
 established an internal market,
 achieve sustainable development based on balance economic growth and Price
 European Economic & Monetary Union

The European Economic and Monetary Union was established in the mid 1920s with
the creation of the Snake in the tunnel which took a more concrete shape in the form of
the EMS in 1979. Snake in the tunnel, refers to an attempt towards monetary
integration among six west European Nations in 1972 the purpose of which was to
narrow fluctuation in those currencies.

Objectives :
 Improving trade
 Increasing travel
 Reducing risk
 European Free Trade Association

The EFTA is an intergovernmental organization set up for the promotion of free

trade and economic integration to the benefit of its four Member States: Iceland,
Liechtenstein, Norway, and Switzerland. The Association is based on the EFTA
Convention and a worldwide network of free trade and partnership agreement.

Objectives:
 strengthening of trade and economic relations
 free trade in goods;
 fair competition;
Sagor Ahmed
ID: 20133022
 The American and Caribbean Scheme
US-Canada Free Trade Agreement
The United States-Canada Free Trade Agreement (FTA) is a
bilateral trade agreement between the United States and Canada
that was signed on October 4, 1988. It was implemented on
January 1, 1989, and was the first comprehensive free trade
agreement between two highly developed countries.

Objective
• The FTA eliminated most tariffs on goods traded between the
two countries.
• set out rules for trade in services, such as banking, insurance,
and telecommunications.
• It also established a dispute resolution mechanism to resolve
disputes between the two countries.
 The American and Caribbean Scheme

US-Canada Free Trade Agreement

The United States-Canada Free Trade Agreement (FTA) is a

bilateral trade agreement between the United States and Canada
that was signed on October 4, 1988.
Objective
• Eliminated most tariffs
• Set out rules for trade in various sector
• Eliminate barriers
 The American and Caribbean Scheme

North American Free Trade Agreement (NAFTA)

In 1994, the FTA was renamed by the North American Free

Trade Agreement (NAFTA), which also included Mexico.

Objective
• to reduce barriers to trade.
• to increase cooperation.
• to create an expanded and safe market.
• to establish clear and mutually advantageous trade rules.
 The American and Caribbean Scheme

Andean Community

The Andean Community is a regional trade bloc in South

America that was founded in 1969 by Bolivia, Colombia,
Ecuador, Peru, and Chile.

Its main objective is to promote economic integration, free

trade, and social and cultural cooperation among its
member countries.
 The American and Caribbean Scheme

Southern Common Market (MERCOSUR)

The Southern Common Market, also known as Mercosur is a regional

trade bloc in South America. It was founded in 1991 by Argentina,
Brazil, Paraguay, and Uruguay, and later expanded to include
Venezuela.

Objective
• The main objective of Mercosur is to promote economic
integration and free trade among its member countries.
• It also has a common external tariff for goods imported from
outside the bloc.
• In addition to promoting trade, Mercosur also has social and
political goals, such as promoting democracy, human rights, and
sustainable development in the region.
 
 The American and Caribbean Scheme

Central American Common Market

The Central American Common Market (CACM) is a regional

trade bloc in Central America, founded in 1960 by El Salvador,
Guatemala, Honduras, Nicaragua, and Costa Rica.
Its main objective is to promote economic integration and
free trade among its member countries.
 
 The American and Caribbean Scheme

Caribbean Community and Common Market

The Caribbean Community and Common Market, also known

as CARICOM, is a regional organization of 15 Caribbean
countries and dependencies. It was established in 1973. Its
main objective is to promote economic integration, free
trade, and cooperation among its member countries. In
addition to promoting trade, CARICOM has established
several programs and initiatives to support regional
development, including programs for education, health,
and infrastructure.
Integration Scheme in Africa and the Middle East

Economic Community of West African States(ECOWAS)

It is a regional intergovernmental organization in West Africa

established on May 28, 1975, with 15 country are Benin,
Burkina Faso, Cabo Verde, Cote d'Ivoire, The Gambia,
Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger,
Nigeria, Senegal, Sierra Leone, and Togo.

Objective
Economic Integration
Monetary Cooperation
Peace and Security
Agricultural Development
 
Integration Scheme in Africa and the Middle East

Gulf Corporation Council

The Gulf Cooperation Council (GCC) is a regional organization of

six Arab countries in the Persian Gulf region, including Bahrain,
Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab
Emirates. It was established in 1981.Its main objective is to promote
economic, social, and cultural cooperation among its member
countries. In addition to promoting trade, the GCC has established
several programs and initiatives to support regional development.

 
 Md. Siam Hosen
ID Number: 20133019
Economic Co-operation Schemes in
Asia and Pacific
Association of Southeast Asian
Nations

Asia-Pacific Economic
Cooperation

South Asian Association for Regional Cooperation(SAARC)

And South Asian Free Trade Area (SAFTA)
 Association of Southeast Asian Nations
Established In: 1967
Member countries:

Brunei Cambodia Indonesia Laos

Myanmar Philippines Singapore Thailand

Vietnam Malaysia
 Association of Southeast Asian Nations

AIM

Economic growth Social Progress Cultural Development Free Trade AFTA

 Asia-Pacific Economic Cooperation

Established In: 1989

Member countries:

Brunei Philippines Indonesia Singapore Malaysia Thailand Vietnam Australia

Canada Chile China Hong Kong Japan South Korea Mexico New Zealand

Papua New Peru Russia Taiwan United State

Guinea
 Asia-Pacific Economic Cooperation
AIM

Free Trade like AFTA Professionals Movement

Investments Simplifying Custom

Procedures
 South Asian Association for Regional Cooperation

Established In: 1985

Member countries:

Afghanistan Bangladesh Bhutan India

Nepal Pakistan Sri Lanka Maldives

 South Asian Association for Regional
Cooperation

AIM

Economic growth Cultural Development Help each other

And Social Progress