Economic Groupings

Economic Groupings

1. Nations group together to benefit their economies...

   • Comparative Advantage - Countries specialising in producing an exporting goods that they can produce at a lower relative cost than other countries.
   • To reduce barriers to trade which increases amount of trade between countries, so can benefit economies.
   • Free trade also means larger market for their goods

2. Nations group together to promote development...

   • Can tackle development issues e.g. disease epidemics, poverty and education issues.
     • UN is an international organisation with 193 member states that help tackle global concerns. in 2000 it set 8 Millennium Development Goals which highlighted the key global development issues.

3. Nations group together to increase security and promote peace...

   • Countries that are working together in a group are less likely to go to war with each other as it will negatively effect their economies and development.

4. Trading Bloc - An arrangement among a group of nations to allow free trade between member countries but impose tariffs (charges) on other countries that may wish to trade with them.

   • Smaller nations have a bigger representation in world affairs.
   • People seeking work can move between countries easily.
   • Smaller regions within large countries have a greater voice leading to seperatist movements e.g. Scotland and UK
   • Elites within system can hold disproportionate amount of power through voting systems.
   • Pressure to adopt central legislation
   • A loss of sovereignty, decisions are usually centralised.
   • Certain economic sectors are damaged by having to share e.g. UK sharing fishing space with France and Spain
   • Some loss of financial controls to a central authority e.g. European Central Bank
   • Remote regions within countries receive support from the larger organisation e.g. EU Regional Fund helps Southern Italy and Western Ireland.
   • A greater chance of peace with international understanding.
   • Particular sectors of national economy can be supported e.g. Agriculture within EU has the Common Agricultural Policy (CAP).
   • Chance of common currency simplifying transactions.

5. Free Trade Area - Countries agree to abolish tairffs & quotas on trade between themselves but maintain restrictions from outside the area e.g. NAFTA

6. Customs Union - Member countries operate a tariff on imports from outside the group e.g. The South American Regional Trade Agreement

7. Common Markets - Like Customs Union but also allows the free movement of labour and capital e.g. CARICOM

8. Economic Union - Members are required to do all of what other types of unions do and also to adopts common policies in such areas as agriculture, transport, pollution, industry, energy and regional development.