INTERNATIONAL BUSINESS

TOPIC :•ECONOMIC INTEGRATION•LEVELS OF INTEGRATION•IMPACT OF INTEGRATION

BY: SOWMYA C N

IMPACT ON INTEGRATION

1. Trade creation and diversion2. The effects of integration on

import prices,compitetion,economies of

scale, and factor productivity.

1.Trade Creation and Trade Diversion

Whereas trade creation is positive in moving toward free trade, and therefore lower prices for consumers within the European Union, the impact of trade diversion is negative.

2.Increased Competition and Economies of Scale

• Integration increases market size and may result in lower degree of monopoly in the production of certain goods and services

• Certain industries may not be economically viable in smaller, trade protected counties

a)Internal economies of scaleb)External economies of scale