Types of Regional Economic Integration

We have five possible types of regional economic groupings. The various forms are described below, in their ascending order of degree of co-operation, dependence, interrelationship, and amount of integration ;

i. Regional cooperation for development
ii. Free trade area
iii. Customs union
iv . Common market and
v . Political union.

 Regional co-operation for development :
The modus operandi of a cooperation for development is for participating countries to pool their resources together and finance a joint venture that is of economic interest to each participating country. A specified share of the output of the venture is also purchased by each country. The joint ventures could be industries that cannot possibly be financed by a sole country.

     Free - Trade Area : This involves the coming together of two or more countries to reduce or totally eliminate custom duties and non tariff trade barriers among partner countries. However,  members could still maintain individual tariff structure for other countries that are not members of the free trade area. The removal of this trade impediments creates a mass market allowing free flow of goods and services. A typical example is the free trade agreement the us has with canada and mexico (NAFTA) and separately with Israel.
 
  Customs Union : apart from the reduced or eliminated internal tariffs a custom union as a common external tariff on products imported from countries outside the union.
 
 Common Market : in addition to eliminating all tariffs and other restrictions on internal tread adopting of a set of common external tariff, a common market agreement goes further to remove restrictions on the free flow of capital and labour among participating nations.
 A common market by implication does not stop at freeflow of goods only, but allows services and capital to move freely among participating countries. The united states of America, Central America Common market and the Andean Common market are examples.
   
Political Union :  a political union signposts the greatest form of economic and political integration of any regional corporation. Political union may be voluntary or enforced. The council for Mutual Economic Assistance (COMECON), a centrally controlled group of countries organised by the USSR before it's disbandment represented a typical form of an enforced political union. The European Union (EU) is also a political union though not all provisions of its treaty have been universally accepted.