OBJECTIVES AND IMPORTANCE OF ECONOMIC INTEGRATION
Economic integration
Is the situation whereby two or more countries establish economic relations in order to achieve some economic benefits.
However economic integration is the legal and political processes comprised of agreements between countries which aimed at eliminating trade barriers, harmonizing monetary and financial policies and sharing of competitive benefits Normally economic integration sometimes is called regional integration or cooperation.
Example of regional integration formed in African countries include East African Community (EAC), Suthern African development community (SADC), Economic community for west African States (ECOWAS), Common markets for Eastern and south African countries (COMESA), Economic community for central African states (ECCAS) Arabs Magharib Union (AMU).
TYPES OF ECONOMIC INTEGRATION
1. Bilateral cooperation
This is a type of cooperation which involves the agreement between two states E.g. Tanzania and Zambia in running TAZARA. In this co-operation there is no specific or common ideology governing the undertaking of the member countries.
Countries involve in this cooperation can agree to cooperate in various areas such as economic, cultural, scientific and technological researches, political, security and defense.
2. Multilateral Cooperation
This is the types of Cooperation which involve group of many countries like regional inter grouping such as S.A.D.C, E.A.C, and COMESA, NAM, AUetc. Multilateral cooperation is sometimes known as regional multilateral integration.
STAGES AND FORMS OF ECONOMIC INTEGRATION
1. Free trade areas
This is the first stage and form of economic integration that provide more freedom to the member states on trade areas through eliminating trade barriers.
2. Customs union
Is the stage and where goods and services are traded freely without and barriers among the member states. In this stage the member countries have to formulate the trade policies with positive benefits.
3. Common markets
This is the third stage and the form of economic integration with same aspects like custom union. This stage involves the movement of labour and capital among the members in the region.
4. Economic unions
This is the fourth stage and form of economic integration which ensures free movement of goods, services and production aspects as well as integration of economic policies especially momentary and fisical policies.
In this stage the government harmonize the monetary policies, taxation and government expenditures. In this stage also the common currency can be introduced.
5. Political union
This is the last stage which involves the formulation of political federation. In this stage the member states are integrated in to a single economic union and political institution which hold all political powers and authority of all member countries.
CONDITIONS FOR THE SUCCESSFUL OF ECONOMIC INTEGRATION
There are various conditions to be considered in order to ensure the successful of economic integration and these:-
1. Rationale infrastructures
There should be presence of good transport and communication systems among the member countries in the region, this will help to simplify the movement of people, goods and services. This include both land transport, air and water transport if is available.
2. Presence of common language
There should be presence of common language which will help people to trade well without barrier among the member states. Example in east African community the common language used is Kiswahili.
3. Presence of different goods and services
There should be presence of variation of goods and services produced by the members in the region, this helps more on finding markets because there is no competition.
4. Presence of similar level of development
The successful of economic integration need to be established by the member countries with the similar level of social and economic development hence this will bring about equal contributions and benefits.
5. Common geographical location
The member states should be within the same geographical location in order to avoid transportation cost and other elements of interference in the region. Therefore this helps to overcome the similar geographical threats.
6. Presence of common currency
The successful of economic integration need to have common currency in order to avoid difficult on trading activities.
7. Presence of political stability
The successful of economic integration need to peaceful political stability in order to make people to trade without fear and any restrictions.
RATIONALE/ REASON/ OBJECTIVES FOR ECONOMIC INTEGRATION
Qn: In six points rationale of regional cooperation.
1. To reduces the cost of trade
Economic integration help to reduce trading cost through elimination of tariffs for transported goods and services among the member countries.
2. To increase the availability of goods and services
Most regional integration are formed for the aim of increasing the rate of goods and services among the members in the country.
3. To improve market efficiency
Regional integration helps to reduces and trade barriers and increase production of goods and services among the members in the region, hence increase the quality and quantity of produced.
4. To explore non economic gains
Economic integration provide opportunities to the member countries to explore non economic opportunities such cultural diffusion, intermarriage and exchange of other materials culture within the member countries.
5. To promotes technological diffusion
Normally economic integration promote diffusion of technology due to technological transfer of technology in different field caused by free movement of people, goods and services in the region.
6. To create employment opportunities
Economic integration is emphasized to promote employment opportunities due to the presence of free movement of goods, services and labour.
BENEFITS / IMPORTANCE OF ECONOMIC INTEGRATION
Qn: In six points elaborate six contributions of regional integration.
1. It helps to reduces the cost of trade
Economic integration help to reduce trading cost through elimination of tariffs for transported goods and services among the member countries.
2. It helps to increase the availability of goods and services
Most regional integration are formed for the aim of increasing the rate of goods and services among the members in the country.
3. It helps to improve market efficiency
Regional integration helps to reduces and trade barriers and increase production of goods and services among the members in the region, hence increase the quality and quantity of produced.
4. It helps to explore non economic gains
Economic integration provide opportunities to the member countries to explore non economic opportunities such cultural diffusion, intermarriage and exchange of other materials culture within the member countries.
5. It helps to promotes technological diffusion
Normally economic integration promote diffusion of technology due to technological transfer of technology in different field caused by free movement of people, goods and services in the region.
6. It generate employment opportunities
Economic integration is emphasized to promote employment opportunities due to the presence of free movement of goods, services and labour.
7. It helps to expands regional and national markets.
8. It helps to promotes industrial development among the member countries.
9. It helps to promote development of transport and communication.
PROBLEMS FACING ECONOMIC INTEGRATION/COOPERATION
QN: Critically assess six problems facing African economic integration or continental cooperation.
1. Ideological differences among the member countries
This can cause source of political misunderstand among the member countries. Example: Capitalism and socialism.
2. Different in level of economic development
Some countries their level of economy is highly developed compared to other member countries in the region, hence bring difficult in contribution.
3. Language differences among the member countries
E.g in EAC some members use Kiswahili language while other members use English language hence bring difficult in trade activities.
4. Difference values of Currency
Different in value of currency bring difficult in contributin and trade. Example: in East African Community each country has its own currency which vary in terms of values, hence this cause difficult in benefit among the member countries.
5. Multiple membership
Majority of member countries face limited administrative and financial capacity. Hence some member countries are multiple members of different organizations with similar objectives.
6. Shortage of qualified man power
This cause the problem in running the region in a efficient way.
7. Political instability in many African countries
Political instability contributes stability of trade in the region. e.g Rwanda, Burundi etc.
8. Problem of nationalism/selfishness
Most members looking for the benefits of their countries instead of developing the region.
9. Poor transport and communication system.
10. Neo-colonialism.
11. Diseases and natural calamities. E.g HIV/AIDS, prolonged droughts, etc.
