Economic Integration and Globalization: Phases and Impacts

Economic Integration

Economic integration is the phenomenon of the progressive elimination of economic borders among a group of countries. It occurs in phases:

1. Preferential Agreement: A number of countries grant each other customs advantages not applied to other countries.
2. Free Trade Area: Member states eliminate tariff obstacles but maintain their own tariffs against third parties.
3. Customs Union: A common external tariff is applied to all imports coming from third countries.
4. Common Market: This is a customs union in which there is also a free flow of factors of production.
5. Economic Union: This means a complete common market with coordinated macroeconomic policy and the implementation of common economic policies.
6. Monetary Union: All currencies of member countries are replaced by a single currency and a supranational institution.
7. Political Union: This is the full integration of the economies of member countries, adopting a common foreign and security policy and unifying internal politics and the judiciary.

Globalization of the Economy

Globalization is the progressive development of financial and economic interconnection between enterprises of different countries, taking advantage of the liberalization of the movement of goods and capital.

Aspects of Globalization:

• Commercial and Productive Globalization
• Financial Globalization: This involves a great liberalization of capital movements.
• Technological Globalization: The technology used in production processes is very similar in any location.
• Cultural Globalization: The development of the media causes cultural differences in the world to be reduced.

Benefits of Globalization:

• Favors the country's economic growth.
• A rapprochement between the development levels of countries from North and South.
• Cultural globalization is promoting the rights of women and children in more traditional societies.

Disadvantages of Globalization:

• Favors multinationals.
• States are forced to reduce social coverage.
• Accompanies increased external debt of poor countries.
• The reduction of trade barriers benefits developed countries.