BUSI2025 Lecture Notes - Lecture 8: Free-Trade Area, Regional Integration, Single Market
Document Summary
R eg i on a l ec on omic i n t eg r a ti on. Regional economic integration agreements between countries in a geographic region to reduce tariff and nontariff barriers to the free flow of goods, services, and factors of production between each other. Trade creation: trade creation occurs when low cost producers within the free trade area replace high cost domestic producers. Closer political cooperation results in greater collective influence in dealing with other nations. Greater consensus e. g. lower risk of violent conflicts. Trade diversion occurs when higher cost suppliers within the free trade area replace lower cost external suppliers. While a nation as a whole may benefit from a regional free trade agreement, certain groups may lose. Eurozone: 19 of the 28 eu members have adopted the euro as a common currency and legal tender, volatile trading history since its establishment in 1999.
