Economic Integration

Topics: Africa, International trade, Madagascar Pages: 5 (996 words) Published: March 31, 2013


20TH MARCH, 2013

Economic integration is an economic agreement between regions characterized by removal or reduct ion or barriers to trade and harmonization of fiscal and monetary policies. The main aim of economic integration is not only to reduce costs for producers and consumers but also to increase the volume of trade among the countries in question. Forms of Economic Integration

The following are the common forms of economic integration;

Preferential Tariffs
In this form of integration, the parties involved levy lower rates of duty on goods

imported from member countries and maintain relatively h igh tariffs to imports from other countries.

Free trade associations
Here, the member states levy no duty on imports from other member countries. Member

states may charge different duty on its imports from other countries. 

Custom Union
In custom unio n, free trade among the member states is protected by a unified schedule of

custom duties levied on imports from other countries. In addition, if there is free mobility o f both labor and capital between member states, the integration is referred to as common market.

Economic Union
This is integration where members states agree to harmonize their economic policies.

Total economic integration
In this form of integration, there is a pursuit of a common economic policy by all polit ical

units from member states.
Examples of Economic Integration in Africa
The following are examples of eco nomic integration in Africa; 

Southern African Customs Union (SACU), which comprise o f the following member states; Botswana, South Africa, Lesotho, Swaziland and Namibia.

(SADC) whose members include; Lesotho, Malawi, Botswana, Namibia, Angola, Mozambique, Zimbabwe, Swaziland, Zambia and Tanzania.

East Africa Community (EAC) whose members include; Kenya, Tanzania, Uganda, Ethiopia, Rwanda, Burundi, Northern Sudan and Djibouti.
Impediments to regional integration
The following are barriers to regional integration in Africa;

Reliance on primary exports
Most of the African countries heavily rely on exportation of primary agricultural products

such a cocoa, copper, coffee and cotton. In addition, Africa’s leading export markets are also the same. Export of similar products creates problems in balance of payments if there is disruption or

slump in the price of the commodities in the world market. This has a negative impact on regional integration efforts.

Mode of production
Most of the African countries rely on capital rather than labor intensive methods of

production. This can be attributed to import substitution strategy embarked by most of these countries after independence. Donges and Heimenz (1991, p.217) argued that this strategy favors production of capital intensive goods, the application of capital-intensive technologies and inefficient capital utilization. Reliance on capital intensive modes of production at the expense of labor intensive countries poses a challenge to developing countries since they are endowed with adequate labor force.

Underdeveloped human resources
According to Stewart (1991, p.426) most people in Africa have been neglected, with poor

education and in imperfect health and under used capacities. This leads to low productivity of labor and lack of competitiveness. As such, this leads to low quality and quantity products produced for trade. African countries need to invest heavily in their labor force development through constant and proper training and research.

Overdependence on developed west
African countries still rely on the west countries for imports of raw material and

manufactured products despite the availability of the same products in member states. High dependence on raw materials...

References: Donges B. J, and Hiemenz U. (1991). "Export Liberalization", in Krause and Kihwan (eds.),
Liberalization in the process of economic development
McCoy J. P. (1993). CARICOM and Belize: The first twenty years. Caribbean Affairs, vol. 6 no.
Nomvete, B. D. (1993). Regional Integration in Africa: A path strewn with Obstacles. The
Courier, November-December, pp
PTA/COMESA. (1992). PTA Trade and Development Strategy. COMESA Secretariat, Lusaka,
Stewart, F. (1991). Are Adjustment Policies in Africa consistent with Long -run Development
Needs? Development Policy Review, vol
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Effect of Asean Economic Integration Essay
  • Regional Integration Essay
  • Degrees of Economic Cooperation Between Various Countries Essay
  • Degrees of Economic Cooperation Essay
  • Economic Integration Essay
  • Economic integration Essay
  • What Is Regional Economic Integration Essay
  • The economic theory of integration and the EU customs union in practice Essay

Become a StudyMode Member

Sign Up - It's Free