REGIONAL INTEGRATION REVISTED

OBJECTIVES

1. EXPLAIN AND use correctly concepts and terms associated with regional
integration.
2. Describe the major challenges facing the Caribbean Region Regional integration is
the process by which two or more nation/countries agree to cooperate and work
closely together to achieve peace, stability and economic growth.

TERMS/CONCEPTS ASSOCIATED WITH REGIONAL INTEGRATION

BILATERAL AGREEMENT This term is used to describe an agreement that is made

between two groups, countries or nations/countries.

MULTILATERAL AGREEMENT This term describes an agreement that is made among

many groups, countries or many countries.

COMMON MARKET – is an economic unit that is formed by countries, with the intention
of eliminating or reducing trade barriers among its members.

SINGLE MARKET – this is used to refer to a group of countries that have few or no
restrictions on the movement of goods, money and people between the borders of the
members of this group.

ECONOMIC INTEGRATION – this is the unification of economic policies between

different countries through the partial or full abolition of tariff and non-tariff restrictions on
trade taking place among them prior to their integration. It may further be seen as the process
by which the economies of a group of countries are drawn more closely together so that the
group as well as the individual countries becomes stronger or more developed.

INDEPENDENT STATE The self-government of a county, nation or state by its residents

and population. This country now has the right to exercise freely the full range of power a
country possesses under international law.

UNDERDEVELOPED COUNTRY A nation which, comparative to others, lacks

industrialization, infrastructure, developed agriculture, and developed natural resources, and
suffers from a low per capita income as a result. It is therefore seen as a relatively poor
country with little or no material well-being.

DEVELOPING COUNTRY Referred to as a less developed country, a country with a low

standard of living, an underdeveloped industrial base, and a low Human Development Index
(HDI) relative to other countries. This country has not yet reached the stage of economic
growth to stand on its own for further growth.

DEVELOPED COUNTRY This is an industrialized country, or ‘more economically

developed country’. This country has a highly developed economy and advanced
technological infrastructure relative to other less industrialized nations. It is a country that has
high level of development and high gross domestic product (GDP) per capita.

TRADE LIBERALIZATION – is the removal or reduction of restrictions or barriers on the

free exchange of goods between nations. This includes the removal or reduction of both tariff,
such as duties and surcharges, and non-tariff obstacles such as licensing rules, quotas and
other such requirements, and the movement towards the removal of trade barriers among the
members of the World Trade Organization (WTO).

GLOBALIZATION – this is the worldwide movement toward economic, financial, trade,

and communications integration. To many, globalization implies the opening of local and
nationalistic perspectives to a broader outlook of an interconnected and interdependent world,
which engenders the free transfer of capital, goods, and services across national frontiers.
Acknowledged as the process by which countries all over the world are becoming connected
or similar because large companies are doing business in many different countries.

MULTINATIONAL CORPORATION are sometimes called transnational corporation, is a

corporation or enterprise that manages production and delivers services in more than one
country.

TRADING BLOC Made up of a large number of countries, with the same political and
economic aims, linked by special trading arrangements among them.

FREE TRADE AREA This is an arrangement wherein a group of countries agrees to

remove tariff and non-tariff barriers to trade among them.

INTRA-REGIONAL TRADE Countries in the region buying locally produced goods from
or selling locally produced goods to, other countries in the region.

FISCAL POLICY Fiscal policy is the means by which a government adjusts its spending
levels and tax rates to monitor and influence a nation’s economy. It is the use of government
spending and revenue collection to influence economy.

MONETARY POLICY The process a government, central bank or monetary authority of a

country uses to control the supply of money, availability of money and cost of money or rate
of interest to attain a set of objectives oriented towards the growth of the economy.

FACTORS PROMOTING REGIONAL INTEGRATION

Common language – The language spoken by most of the Caribbean people is English, and
this will facilitate easy communication.

Close proximity – The Caribbean countries are relatively strategically located. They are
close to each other; this makes travel by air or sea from one country to another relatively
short.
Caribbean countries share a common history – Caribbean people are descendants of
people who had been subjected to slavery and also to indentureship.

Common cultural heritage – The Caribbean people share a common culture in terms of
language, dress, music, cuisine and their general lifestyle.

Small size/Strength in unity – The Caribbean countries are at a disadvantage when

competing against international markets because of their small size. Thus, coming together
makes it easier to have an influence on the international markets.

Common economic, political and social problem – The Caribbean countries encounter
similar problems, such as unemployment, difficulty in accessing international markets, and
lack of adequate capital, poor housing and challenge in health facilities.

The common c hallenges of globalization and trade liberalization – Companies all over
the world are doing business in many countries; they are in the Caribbean region creating
unwelcomed competition. The Caribbean government can no longer restrict extra-regional
imports to protect regional manufacturers/companies, Caribbean businesses are required to
amalgamate or face ruin.

There is an increase in the number of trading blocs – Economic groupings and trading
blocs are being established where a large number of countries are linked by special trading
arrangements among them. Therefore, the Caribbean is required to do the same to ensure
productivity and continuity in its economic growth.

Competition for location of industries – The government of each member states wants what
is best for their country; such aspiration usually leads to competition between the countries
for the location of new industries. The competition often times evolves into envy and
jealousy among member states.

Conflict between territorial and regional demands and loyalties (insularity) – The
Caribbean countries tend to be more interested in satisfying the immediate needs of the
residence within their countries than attending to the demands of the region. The member
states work hard to attain international attention as an individual country than working
together as a part of CARICOM to attain the same.

Absence of common currency – The value of the money in each Caribbean country is
different. A common currency would provide for greater level of integration.

There is an unequal distribution of resources – Some member states are blessed with more
natural resources than others.

Lack of diversification in production – It is interesting to note that most of the CAROCOM

member states produce similar products. Most of the member states are dependent on
agriculture; therefore, they process and manufacture products from sugar cane, bananas,
cocoa, coffee and ground provisions. This puts constraint on intra- regional trade.