What is meant by the term economic integration? What are the various stages that economic integration can take?

Economic integration refers to an agreement among countries in a geographic region to reduce, and ultimately remove, tariff and non-tariff barriers to the free flow of goods, services, and factors of production between each other. It's about making economies more interconnected and interdependent.

Economic integration can occur in various stages. The primary stages include: 1. Preferential Trading Area: Countries in the area enjoy reduced tariffs for certain products. 2. Free Trade Area: No tariffs or restrictions on trade for goods among member countries. However, there can be different tariffs on imports from non-member countries. 3. Customs Union: Member countries would have to apply a common external tariff (CET) on imports from non-member countries. 4. Common Market: A step further than the customs union where besides CET, there is free movement of labor and capital among member countries. 5. Economic Union: This stage involves the unification of monetary, fiscal, and social policies, which would need a common governing body. 6. Complete Economic Integration: The final stage where member countries have total economic integration in all sectors.

To summarize, the stages of economic integration range from basic tariff reductions (preferential trading areas) to complete integration where all policies, even political ones, are harmonized. The main purpose of all these stages is to increase trade and interdependence between countries, which is believed to lead to benefits such as greater economic efficiency and peace between nations