Economic Integrations

Economic integration is classified according to the levels or stages of development as follows:

1. A free trade area: This is the type of integration whereby countries remove all trade barriers such as tariffs, imports and export quotas or devices, to trade freely among member countries but each member country maintains unilateral right to impose tariffs on goods from the rest of the world.

2. A custom union: This is a stage at which, in addition to having abolished trade restriction among the member countries as in a free trade area, the members have a common tariff against non-members (third countries).

3. A common market: In this stage, on top of what takes place in customs union, there is a free factor movement among the member countries. This means that capital and labor are free to move within the region.

4. An economic community (union): This embodies all elements of the common market; in addition, the member countries institute joint ownership of certain enterprises like roads and railways.

5. Total economic integration: In this stage, not only is there free movement of commodities and other factors of production among the member states as in economic union, but also there is a unification of monetary, fiscal, social and other policies.

1. Good infrastructure In order for economic integration to be successful, countries in the region of integration must have good infrastructures to facilitate movement of goods and people from one area to another.

2. Political will and commitment For a regional integration to be successful, political leaders must be willing and committed to implement various resolutions that are made and to make necessary decisions for the betterment of the integration.

3. Common language Common language among the people in the integration enables ease of communication among the people in the region when they engage in socio-economic and political activities.

4. Trade gains For integration to be successful, each member country must be gaining from trade. If some member countries do not gain from trade or any economic activity, then the integration will not be successful.

5. Similar level of development In order to reduce uneven distribution of gains among the member countries, countries should have similar level of economic development. If the levels of development are so wide, rich members will gain more than poor countries.

6. Cultural similarities Cultural similarities facilitate interactions among the people in various economic activities such as trade and investments.

7. Trade creation Trade creation is said to occur when a country in an integration imports goods from a low cost member country after abolition of tariffs which it was importing from a high cost non-member country.

1. To expand the market among the member countries and attain a common voice on advocating the market for the goods of the member countries.
2. To promote transport and communication development for easy distribution of goods and services as well as facilitating information flow.
3. To intensify security, fraternity and unity among the countries, which have long been disunited and conflicting over various aspects, based on ethnic grounds.
4. To maintain peace and uphold the status of human rights among individuals of the member countries in order that democracy can prevail and discrimination of any kind can be brought to an end.
5. To promote comprehensive research activities on various areas that range from economic, social, political and environmental aspects.
6. Economic integration also encourages heavy investment on the available resources.
7. To promote the standard of living among the member countries because of increased production, easy movement of goods and services and economic diversification.
8. To promote employment opportunities following the diversification of the economy and development of industries among the member countries.
9. Economic integration increases the opportunity to borrow from outside since it is easy to borrow as a community rather than a single country due to the fact that donors do not have high confidence on individual countries.
10. To promote the quality of production among the member countries through positive competition in the production process.
11. To easily share common services such as posts and telecommunications, railways, airways, medical services.
12. To stimulate smooth development of trade using a common currency and by removing tariffs.
13. Economic integration leads to political cooperation and sharing of ideas and experiences which in turn bring effectiveness in the production process and promotion of peace and security for smooth development process.

1. Trade diversion: A high cost trade due to the geographical restrictions can replace low cost trade. A country can buy goods at a higher price than it is used to buy from another country, which are not members, leading to the decline in profit or income generation.

2. Movement of goods can be in one direction leaving other countries without goods. This can encourage the occurrence of polarized development in which some countries develop at a higher speed than other countries.

3. Countries may be compelled to buy goods of poor quality within the region especially if the level of technology is low. This is a great problem in African countries where there is low level of technology in many countries. Agricultural products, for example, tend to be very poor due to poor methods of cultivation and processing among the countries.

4. Uneven industrial development. In the East African Community, for example Kenya was developing faster and at the expense of Tanzania and Uganda because of more industries that made her keep on exporting manufactured goods of high quality.

5. Economic integration is usually associated with political problems. Some leaders tend to be in need of holding positions permanently so that they can keep on looting while in position.

6. Cultural disruptions, which tend to stifle cooperation among the members, can occur following the multiple interactions of people from different member countries.

7. It is difficult to harmonise the common external tariffs due to differences in the foreign policies.

8. Member countries tend to produce the same goods and hence forces to look for market outside the region.

1. Strong determination among the states can lead to the fast pace of economic integration. This is because when people are determined they tend to be ready to work very effectively for bringing about common development.

2. Language, which functions as a unifying force, can lead to fast economic integration. When people communicate intelligibly they easily exchange ideas and experience as a result they cooperate easily in solving common problems.

3. Readiness to cooperate among the leaders of states also plays a great role in facilitating economic integration. This happens when some of the leaders are ready to relinquish some of their powers and work cooperatively.

4. External influences also play a great role in integration. Some donors urge that they cannot provide assistance to individual countries since there can be misuse of funds provided.

5. Well-developed infrastructure can also expedite the pace of economic integration. If, for example, there is good transport and communication network, the movement of goods and services as well as the flow of information takes place effectively.

6. Positive economic performance can integrate very easily unlike the countries where there are poor records of economic performances. Usually the countries, which are very poor and have few resources, tend to take time to accept integration for fear of losing freedom to the stronger nations.

7. Existence of peace and security in the countries, which intend to cooperate, can also hasten the pace of economic integration. Where there are political conflicts, integration is not attained easily since people who are the major stakeholders of integration ventures are usually restless and some run out of their countries of origin to other countries as refugees.

8. Advanced level of technology can also act as dynamo for facilitating smooth economic integration because the cooperating nations produce high quality products, which can attract market.

1. Low technology is one of the hindrances of economic integration. This slows down the industrial development among the member countries. Low technology leads to poor quality of product and hence low market for the products leading to poor income generation.

2. Political instability characterized by wars and other problems disrupt peace and security and keep people restless such that they cannot settle and produce or interact effectively.

3. Balkanization (division) of the states is another limitation. This leads to the poor cooperation in different economic aspects since people of one country tend to feel as different in status and belongingness from people of other countries.

4. Poor infrastructure network like roads, railways make cooperation ineffective since movement of factors of production, as well as goods and services, can take place effectively between member countries.

5. High degree of poverty among the member countries weakens the cooperation. Because of poverty people fail to move from one country to another, they cannot invest properly in technology promotion and production of high quality goods, and efficient provision of services.

6. Problem of common market and the way the local markets operate do not allow for the positive cooperation among the member countries.

7. The resources are not evenly distributed since some countries are naturally endowed with more resources than other member countries. This also leads to poor cooperation as some countries are not ready to share their resources with other countries, which lack such resources.

8. Environmental predicaments (problems) like floods, such as those of Malawi and Mozambique; earthquakes, drought, diseases like EBOLA that hit Uganda, and the HIV/AIDS pandemic disrupt cooperation due to the fact that people are not physically and psychologically settled and hence cannot cooperate effectively.

9. Cultural differences are also setbacks to economic integration. This is manifested through existence of many tribes, religions and political ideologies. With different cultural orientations people fail to easily reconcile their differences and work together smoothly.

10. Lust for positions among some of the leaders is another problem as some of them do not like to relinquish some of their powers to other leaders for the sake of promoting economic integration.

11. Some countries are reluctant or are not committed to contributing for the development of the organization leading to ineffective running of the various functions.

12. High illiteracy rate is also another bottleneck. This obstructs the diffusion of technology among the member countries.

13. Explosive population expansion creates pressure for resources and forces the governments to concentrate on solving the problems of population growth like food supply rather than focusing on the economic integration among the member countries.

14. Exhaustion of resources caused by over exploitation deters economic integration in the developing countries.

15. Inferiority among the small countries, which fear being dominated by other countries, some of which are even more developed than them, is a hindrance too. These small and poor develop feeling that they can lose their freedom and the available few resources.