Economic integration may be defined as a condition of international trade in which all trade barriers and restrictions are removed. In economic integration, there is perfect capital mobility, complete freedom of establishment of business and unhindered flow of information and technology.
Countries with common interests come together to form an organization whose major objectives are to remove trade barriers and other obstacles that reduce the free flow of goods and services between them.
A good example of an economic integration in Africa is the Economic Community of West African State (ECOWAS).
Types of regional economic integration
- Free trade area: free trade area is the type of integration in which member-countries agree to remove all restrictions to trade among them. Tariffs, quotas and bans are not imposed on goods coming from or going to member- nations. There exists a common internal tariff policy among member-nations.
- However, each country is free to have its own tariff policy as regards commodities from countries outside the free trade area.
- Common market: Common market also known as Economic Community, is a form of co-operation in which there is a common internal and external tariff policy. There is free mobility of labour and capital between member- states. That is, there is free movement of goods, services, capital and labour.
- A common market harmonises taxation, social and economic policies. A good example of a common market is the European Economic Community (EEC).
- Economic Union: Economic union is a type of integration which takes the form of total integration of the member-countries. It is aimed at harmonizing the social, economic, industrial commercial and technological polices of member-nations.
- Furthermore, it involves the unification of member-nations, monetary and fiscal policies. A good example of Economic union is the Economic Community of West African State (ECOWAS).