Question: In theory, several levels of economic integration are possible. Arrange the following from the least to the most integrated: A. Common Market B. Free Trade Area C. Economic Union D. Political UnionE. Customs UnionChoose the correct answer from the options given below
Options:
A, B, C, D, E
A, C, D, E, B
B, E, A, C, D
C, B, A, E, D
• Economic integration:
It is an agreement among nations to reduce or eliminate trade barriers and agree on fiscal policies. Â
• Economic integration can be classified into five additive levels, each present in the global landscape:
A free trade areaÂ
​This is the most basic form of economic cooperation. Member countries remove all barriers to trade between themselves but are free to independently determine trade policies with non-member nations.
An example is the North American Free Trade Agreement (NAFTA).
Customs union.Â
This type provides for economic cooperation, as in a free-trade zone.
Barriers to trade are removed between member countries.
The primary difference from the free trade area is that members agree to treat trade with non-member countries in a similar manner.
Common market.Â
This type allows for the creation of economically integrated markets between member countries.
Trade barriers are removed, as are any restrictions on the movement of labour and capital between member countries.
Like customs unions, there is a common trade policy for trade with non-member nations.
The primary advantage for workers is that they no longer need a visa or work permit to work in another member country of a common market.
An example is the Common Market for Eastern and Southern Africa (COMESA).
Economic union.Â
This type is created when countries enter into an economic agreement to remove barriers to trade and adopt common economic policies.
An example is the European Union (EU).
Political union.
It represents the potentially most advanced form of integration with a common government and where the sovereignty of a member country is significantly reduced.
This is only found within nation-states, such as federations, where a central government and regions (provinces, states, etc.) have a level of autonomy over well-defined matters such as education.