Economic Integration Essay

1764 Words8 Pages
Introduction. The purpose of this assignment is to bring a clear understanding on what economic integration is, giving reasons as to why economic integration has become popular in the world, stating the challenges facing economic integration and finally recommending the effective suggestions that should be applied so as to overcome the various challenges that face economic integration. QUESTIONS. 1. a) Define economic integration and illustrate your answer by giving examples around the world. In economics, the word “integration” was first employed in industrial organizations to mean the combination of businesses or organizations through economic agreements. There were two types of integration namely: horizontal integration and vertical integration. Horizontal integration referred to the combination of competitors in the economy while vertical integration referred to the combination of suppliers with customers. Therefore, the term economic integration can be defined as the unification of economic policies between different states through the partial or complete abolition of tariff or non-tariff restrictions on trade that is taking place among or between the states prior to their economic integration. The word “integration” was first used in the year 1930s and 1940s when Frits Machlup credited Eli Heckscher, Herbert Gaedicke and Gert von Eyern been the first users of the term “economic integration” as at its current sense. Machlup firstly saw the appearance of the usage of the term “economic integration” in the year 1935 when Heckscher made an English translation of his book “Merkantilismen(Mercantilism in English)” that was published officially in the year 1931, and also independently in Gaedicke’s and von Eyern’s 1993 second volume study of “Die produktionswirtschaftliche Integration Europas: Eine Untersuchung über die Aussenhandelsverflechtung der europaischen
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