![]() One of the main criticisms of the economic blocs is the loss of sovereignty of the member countries. However, it loses the advantages that the relationship with other countries that are outside the bloc may eventually represent. When a country joins an economic bloc, it receives benefits from the member countries. Disadvantages of economic blocks Loss of profits Globalizationįurthermore, trade blocs are seen to aid globalization because they facilitate global negotiations between blocs.įor example, the negotiations carried out by the European Union are useful for simultaneously developing the trade relations of an entire group of countries. Thanks to this, a trade based on the block's products is maintained. This occurs because cheaper products that come from other regions of the world are difficult to enter. Promoting trade between member countries protects national industries. This phenomenon leads to a reduction in costs and allows lower prices for the consumer.Ĭonsequently, an increase in demand is achieved that generates a growth in trade. Likewise, it leads to the specialization of the industry in each country. This makes it possible to replace high-cost local producers with cheaper and more efficient imports. Advantages of economic blocks Trade growthĮasy access to the markets of other countries implies an increase in national trade. In this case, a series of common economic policies are also shared, including the use of a common currency. However, its particularity is that in addition to open trade, they also share a tax system and a currency.įor example, the European Union is a grouping of countries that not only share a common market. ![]() The economic union has practically the same characteristics as a common market. Like the ECO, it is a common market with a view to deepening the union.Įvidence of this is the creation of PARLASUR, an assembly that functions as a deliberative body for MERCOSUR decisions. This also includes the rules related to monopoly power and other practices that harm competition.įor example, MERCOSUR is a common market made up of Argentina, Brazil, Paraguay, Uruguay, Venezuela and Bolivia and with associated countries in Latin America. This includes the total elimination of tariffs.įor a common market to be possible, there must be a harmonization of the microeconomic policies of the member countries of the bloc. This means that all barriers to trade in goods, services, capital and labor are removed. The common market consists of the existence of free trade between countries, with all economic resources and not only with tangible goods. For this reason it was relaunched in 1969 to officially enter into force in 1970. This is the oldest Customs Union in the world, dating back to 1910, before its member countries were independent. It is an existing union between five South African countries: Botswana, Lesotho, Namibia, South Africa and Swaziland. This implies that members can negotiate as a single bloc with other countries or with other trading blocs.įor example, the Southern African Customs Union - SACU, for its acronym in English. Its particularity is that it includes the creation of a unified external tariff against non-members. The customs union refers to the elimination of tariff barriers between member countries. However in this case, the agreements apply to all goods that are exchanged between them. In some cases only trade is facilitated but in others important joint decisions are made and even the currency is shared. These are classified according to the degree of openness of the tariffs and the depth of the agreements established. There are different types of economic blocks. Thanks to these types of blocks, it is possible to eliminate the economic barriers that exist between countries, allowing the growth of trade and a greater circulation of labor and capital. This is a phenomenon typical of globalization. Its objective is to establish economic agreements to facilitate commercial exchange between member countries. ![]() ![]() Video: Economic Integration and Trading Blocs ContentĪ economic block The trade bloc is a form of economic integration between a group of countries that normally share a common geographical area. ![]()
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