Study Notes
Economic integration involves increased cooperation and coordination of economic policies between countries, leading to greater economic unification.
- Economic Integration — increased economic cooperation and coordination between countries. Example: Elimination of trade barriers.
- Preferential Trade Agreement (PTA) — an agreement to reduce or eliminate trade barriers between countries. Example: Bilateral agreements between two countries.
- Trading Bloc — a group of countries that reduce trade barriers to promote trade liberalization. Example: NAFTA as a free trade area.
- Monetary Union — a common market where member countries adopt a common currency and central bank. Example: European Monetary Union with the euro.
- World Trade Organization (WTO) — an organization promoting trade liberalization and handling trade disputes. Example: Administers WTO trade agreements.
Exam Tips
Key Definitions to Remember
- Economic Integration
- Preferential Trade Agreement (PTA)
- Trading Bloc
- Monetary Union
- World Trade Organization (WTO)
Common Confusions
- Difference between trade creation and trade diversion
- Distinction between types of trading blocs
Typical Exam Questions
- What is a trading bloc? A group of countries that reduce trade barriers to promote trade liberalization.
- How does a monetary union differ from a common market? A monetary union includes a common currency and central bank.
- What are the objectives of the WTO? To promote trade liberalization and handle trade disputes.
What Examiners Usually Test
- Understanding of different types of trading blocs
- Advantages and disadvantages of economic integration
- Functions and challenges of the WTO