Pros and Cons of Economic Integration

Economic integration is the unification of economic policies between different states through partial or full abolition of trade restrictions. There are various stages that include: preferential trade area, free trade area, customs union, common market, economic union, monetary union, and complete economic integration.

Economic integration brings economies of scale, international specialization, expansion of employment opportunities and improvement in terms of trade.

Pros and Cons of Economic Integration

Pros of Economic Integration

  1. Employment opportunities

Through economic integration, there will be the availability of job opportunities as there will be free trade leading to the expansion of the market and there will be an infusion of technological development among the countries hence the need for more people to be employed to carry out the work hence employment opportunities.

  1. Political stability

As countries come together to do trade they may avoid the conflicts that are brought about by the politics for them to trade freely hence it may assist the involved nations to have political stability.

  1. The wide market for their goods

When the countries come together for the purpose of trade they will create a wide market for the goods and services and this may make them benefit from the trade as they will utilize the economies of scale.

  1. Availability of a variety of good

Each country will trade in different commodities and this will make the customers have a variety of products to choose from in the market.

  1. Reduction in the cost of products

The countries will agree on the cost of the products and this will make them have a low cost so that they attract a wide range of customers to buy their products which will eventually increase their sales.

  1. Encourages more trade

The member countries will have to trade freely as there will be no barriers and this will encourage more trade hence improving the economy of the country.

  1. International specialization

When the countries come together, they may come up with people who are specialized in a specific area to improve on productivity hence they will benefit from the coming together.

Cons of Economic Integration

  1. Creation of trading blocs among non-member countries

The countries that come together to form the integration may increase trade barriers among non-member countries and this may affect the usual trade between the countries and also make some of the goods not to be brought in to the country hence disadvantageous.

  1. Trade diversion

Economic integration may make countries decide to trade with non-member countries because they may compare the prices of the products and find out that the non-member countries have relatively high prices which may be beneficial to them.

  1. National sovereignty

Due to economic integration, the member countries normally give up on the degree of control of the monetary and key policies in trade and this may affect member countries whereby the countries may not make any decision about trade on their own.

  1. Job loss

People may lose jobs due to the integration because the member countries involved may do away with other intermediaries that are not important hence making the chains short hence loss of jobs.

  1. Reduces competition

When countries come together, there will be no competition in the market and this may lead to the production of inferior goods by the member countries.

  1. Inhibits growth of small industries

Economic integration favors superior countries and this will inhibit the growth of small industries in the member countries hence affecting the economic growth of the countries.


Economic integration is good in that there will be no trade barriers among the member countries and this will facilitate trade among the countries which will enhance the efficient supply of goods and services to the customers.


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