Unit 4.4 - Economic Integration
What you need to know and understand:
Key concepts:
Concepts to understand:
- Preferential trade agreements
- Bilateral
- Regional
- Multilateral (the World Trade Organization)
- Trading blocs
- Free trade areas/agreements
- Customs unions
- Common markets
- Advantages and disadvantages of trading blocs Advantages, including:
- trade creation [HL only]
- greater access to markets offer potential for economies of scale
- with freedom of labour, there are greater employment opportunities
- membership in a trading bloc may allow for stronger bargaining power in multilateral negotiations
- greater political stability and cooperation
- trade creation [HL only]
- Disadvantages, including:
- trade diversion [HL only]
- loss of sovereignty
- challenge to multilateral trading negotiations
- Monetary union
- Advantages and disadvantages of monetary union [HL only]
- The World Trade Organization (WTO)
- Objectives and functions
- Factors affecting the influence of the WTO, including:
- difficulties of reaching agreement on services/ primary products
- unequal bargaining power of members
Key concepts:
- Scarcity
- Choice
- Efficiency
- Equity
- Economic well-being
- Sustainability
- Change
- Interdependence
- Intervention
Concepts to understand:
- The increased interdependence of economies has benefits and costs.
- Increased economic integration may result in efficiency, welfare gains and improvements in economic well-being but the benefits may not result in equity.
TEXTBOOK unit 4.4
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