Advantages & Disadvantages of Regional Integration

By David Alfredo, an eHow Contributing Writer

Regional integration, advantages and disadvantages.
In recent decades, the globalization of markets and the expansion of free-trade agreements have prompted many areas of the world to consider regional integration as a means to better compete in the world economy. Countries that alone may not have sufficiently large markets for production and consumption join together with regional neighbors in order to form areas where goods and labor can flow relatively freely in response to market demand. This allows the region to leverage the comparative advantage of many countries into one unified block of economic activity. As with every complex political and economic venture, regional integration is not without its risks. In order to better understand the issue, it is necessary to examine both the advantages and disadvantages of regional integration.

First Advantage: Larger Markets

Regional integration usually allows several different countries to come together and form common markets. This is done by opening up borders and eliminating tariffs and taxes on imports and exports between member nations. Where before it might have been difficult for a manufacturer in country A to find enough demand, it is now able to easily market and sell its products in countries B, C and D, thus allowing it to expand its business. Manufacturers and other firms operating in countries B, C and D can do the same, thus increasing economic activity overall. That in turn raises GDP and if properly managed, this can lead to a better standard of living for all citizens within a regional block.

Second Advantage: Increased Global Competitiveness

Another advantage of regional integration is that the effect of a larger market not only allows the internal economic output within the regional