(a) What is economic integration?
(b) Distinguish between a free trade area and a customs union.
(c) Describe two advantages and two disadvantages of free trade area
Explanation
(a) Economic integration is a form of economic cooperation among countries with the aim of achieving higher economic growth and development.
(b) A free trade area is a form of economic integration in which restrictions on trade are abolished within the area, among members, while member countries maintain their own tariff policies with countries outside the area While in a customs union restrictions on trade among members are removed while maintaining a common tariff policy with members outside the union.
(c) Advantages of a free trade area:
(i) The market for goods produced within the area is widened.
(ii) With an enlarged market, large scale production is made possible.
(iii) Competition is promoted with its attendant efficiency.
(iv) There is no loss of political sovereignty by member states.
(v) As a result of the wide market, foreign investments are attracted.