IB Economics 4.4 Economic Integration Key Definitions

Human-made factors of production used to produce goods and services.

A form of trading bloc that builds on a customs union by allowing the free movement of goods, services, and factors of production (labour, capital, etc.) among member countries.

A type of trading bloc that fits all the criteria of being an FTA but also adopts a common policy towards non-member countries.

Cooperation and coordination between countries and their economic policies, to make them more economically interconnected.

The most common type of economic integration where a group of countries agree to gradually remove trade restrictions.

All the physical work and mental skills that humans put into the production of goods and services.

A common market between countries who also share a common currency and a common central bank.

An agreement between countries to reduce the amount of trade restrictions imposed between them on specific products.

Scenario where higher-cost domestic production is replaced by lower-cost imports from a member country after a trading bloc removes tariffs, raising efficiency and welfare.

scenario where higher cost imports from a member country replace lower cost imports due to the formation of the trading bloc.

To free up international trade by removing trade barriers.

Group of countries encouraging free trade and economic integration through the reduction of trade barriers between them.

International organisation who is in charge of regulating and facilitating international trade.