ADM 3318 Lecture Notes - Lecture 8: Regional Integration, Political Union, Trade Diversion

• School: University of Ottawa
• Department: Administration
• Course: ADM 3318
• Professor: Ado Abdoulkadre

Document Summary

Approaches to integration may be: bilateral integration: two countries cooperate closely, usually in the form of tariff reductions, regional integration: a group of countries located in the same geographic proximity decide to cooperate. European union: global integration: countries worldwide cooperate through the wto. Trade creation: increase of trade between partner nations. Political cooperation: a group of nations is less likely to be pushed around. Lowest to highest: free trade area customs union common market economic union political union, free trade: nafta, eu has moved from economic to political union. Consumer price inflation must not exceed that of higher performing countries by more than 1. 5% Five main institutions: european council, council of ministers, european commission, european parliament, court of justice. The euro- common currency adopted by the eu. Benefits: realize cost savings, easy to compare prices, producers will have to reduce production costs to maintain profits, support development of pan-european capital market.