Economic Integration and Third World Development

By Pradip K. Ghosh; Gamani Corea | Go to book overview
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Alternative Concepts of Economic Integration



Regional integration can take diverse forms, involving varying degrees and patterns of social, political and economic co-operation. 1 For our purposes, it is useful to distinguish between two types of integration arrangements: one involving integration among market-economy countries and the other among centrally-planned economies. 2 The patterns and processes of integration under these two systems of economic organization are radically different and it may be useful to discuss them briefly to provide an analytical framework for the subsequent discussion of State trading and regional integration among developing countries.

The trade aspect of integration among market economies consists in the creation of a customs union, i.e. the abolition of all trade barriers among member States and the erection of a common external tariff wall. The trade barriers may consist of tariffs, quantitative restrictions, outright prohibition of imports, licences, foreign exchange allocation, multiple exchange rates, and other administrative and regulatory measures designed to curb imports. The effective abolition of all trade barriers results in the creation of a single market for goods in the entire region. The resulting pattern of trade flows reflects differences in comparative advantage among member States. Thus the basic issue that arises in integration attempts among market economies is the creation of identical competitive conditions for producers, consumers and traders in the member countries.

In the centrally-planned economies, on the other hand, most enterprises are publicly owned, and the economy is organized on the basis of comprehensive national development plans, which lay down detailed targets for production, consumption, investment and prices. The amount and composition of trade is determined in large measure by the annual plan. The import and export plans may or may

From CURRENT PROBLEMS OF ECONOMIC INTEGRATION, 1973, U.N. Publications (5-8), reprinted by permission of the publisher.


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