Economic Integration

Economic IntegrationPresented By: Aadhar Manglik (08302)Ashish Dua (08313)Karan Agarwal (08323)Sarabjeet Singh (08341)Shrey Bharadwaj (08362)Tanisha Kalra (08351)Economic IntegrationCan be defined in social and economic terms In economic terms, it represents arrangements that remove trade barriers ( tariffs and quotas).Social integration is concerned more with the cultural aspect, traditions and habits.Both help in creating a market for each others goods and services.

ObjectivesObtain economic benefits.Helps in economic growth by increase in foreign investments.To strengthen political ties.The bargaining strength of the union improves.Protect infant industries.

FORMS OF INTEGRATIONFree Trade Area Free Trade among members, abolishes all restrictions, own commercial policies.Customs Union Uniform Commercial Policy.Common Market Free movement of labour and capital.Economic Union Unified monetary and fiscal policies, a common central bank.Economic Integration Movement of goods, unified social policies, super national organizational structure.

Prospects and Benefits for IndiaEnhance domestic demand through trade policy, hard and soft connectivity, rules and regulations among others.Large income gains can be achieved due to existing and expanding large domestics markets consisting of primarily young population, particularly large middle class population.Economic Integration can re-balance and diversify its growth, especially export away from high dependence on export to advanced economies towards regional demand and trade from PRC to India. ASEAN economic dynamism and high growth and FDI can contribute to Indias prosperity and outward investment in ASEAN; therefore enhancing Indias growth and thus reduce poverty and increase standard of living and to reduce its export dependence on advanced economies.ECONOMIC INTEGRATION OF DEVELOPING COUNTRIES and LDCsTo accelerate economic development and strengthen their trading and bargaining powerLDCs can simultaneously solve 2 problems through integration :Opportunity for free trade with other countries that are at similar levels of development.Trade with advanced countries without being harmed by their superior economic power.

RATIONALEUNFAVOURABLE FACTORS Political DifficultiesApprehensions of relatively poor and weak countriesLack of adequate infrastructural facilitiesUnequal distribution of the gains due to unequal economic statusLoss of revenue from custom dutiesSAARCMember Countries: India, Pakistan, Bangladesh, Nepal, Sri Lanka, Bhutan and Maldives.Headquarters: Kathmandu, NepalObjective: to accelerate economic and social development through optimum utilization of human and material resources.Major share of worlds poor live in these countries.All the major countries of the region have trade deficit.Majority of population is dependent on agriculture.Intra-regional trade is an important means of promoting regional cooperation.Problems facing Economic IntegrationBorder disputes, ethnic issues, political outlook etc. cause distrust and prevent emotional closeness.Member countries emphasize on exports with developed countries, neglecting intra regional trade.Member countries are competitors in the international market.Foreign exchange problemsUnderdevelopment of transport, communications etc.Limited Complementarity.