Complete economic integration
Encyclopedia
Complete economic integration is the final stage of economic integration
. After complete economic integration, the integrated units have no or negligible control of economic policy, including full monetary
union and complete or near-complete fiscal policy
harmonisation.
Complete economic integration is most common within countries
, rather than within supranational institutions. A good example of this is a country like the United States of America which can be viewed as a series of highly integrated quasi-autonomous nation states. In this example it is true that complete economic integration results in a federalist
system of governance as it requires political union to function as, in effect, a single economy.
To achieve economic harmonization requires increasing central control to pursue an economic area wide policy of inflation combatance and stability promotion. Though this is often viewed as a loss of provincial political sovereignty it is necessary to remove disparities and thus unfair advantages with certain firms across the economic area to provide the best conditions possible for the promotion of competition and therefore economic efficiency.
Economic integration
Economic integration refers to trade unification between different states by the partial or full abolishing of customs tariffs on trade taking place within the borders of each state...
. After complete economic integration, the integrated units have no or negligible control of economic policy, including full monetary
Monetary policy
Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment...
union and complete or near-complete fiscal policy
Fiscal policy
In economics and political science, fiscal policy is the use of government expenditure and revenue collection to influence the economy....
harmonisation.
Complete economic integration is most common within countries
Country
A country is a region legally identified as a distinct entity in political geography. A country may be an independent sovereign state or one that is occupied by another state, as a non-sovereign or formerly sovereign political division, or a geographic region associated with a previously...
, rather than within supranational institutions. A good example of this is a country like the United States of America which can be viewed as a series of highly integrated quasi-autonomous nation states. In this example it is true that complete economic integration results in a federalist
Federalist
The term federalist describes several political beliefs around the world. Also, it may refer to the concept of federalism or the type of government called a federation...
system of governance as it requires political union to function as, in effect, a single economy.
Political Integration
Political integration is required because for an economic union to be most effective it is necessary for all provinces to be at the same stage of the economic cycle. Although provinces is a narrow description as within a specific geographic area there is a much greater amount of mini-economies, all in different stages of the economic cycle; it is in theory possible for a single town to be in recession/boom whilst another is experiencing the opposite. In a practical sense it is best for as many of these economic microcosms to be at the same stage of the economic cycle as possible as it results in government policy having its effectiveness maximized, whether it be through the employment of fiscal or monetary policy.To achieve economic harmonization requires increasing central control to pursue an economic area wide policy of inflation combatance and stability promotion. Though this is often viewed as a loss of provincial political sovereignty it is necessary to remove disparities and thus unfair advantages with certain firms across the economic area to provide the best conditions possible for the promotion of competition and therefore economic efficiency.
See also
- Fiscal unionFiscal unionFiscal union is the integration of the fiscal policy of nations or states. Under fiscal union decisions about the collection and expenditure of taxes are taken by common institutions, shared by the participating governments...