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What is integration?

Neither national resources, nor human resources are distributed evenly. Societies have different cultural backgrounds, different priorities, different history and experience. They cooperate with each other in order to develop, acquire rare goods and expand their markets. Often that sort of cooperation includes several countries or more. As a whole, they are stronger – their cooperation expands and sometimes deepens.
This is the reason behind the creation of economic integration groupings. Integration is, above all, the enhancement of economic cooperation. However, this would be impossible if not for political cooperation. The drawback of being a part of any grouping is having to partially resign from being completely independent – every member of the grouping has to abide by the common decisions, even if it doesn't agree with them.

Stages of integration

There are 5 most common stages of economic integration.

• The lowest – free trade area – guarantees a free movement of goods between countries, which means the lack of quotas and tariffs. However, every country decides on its own trade policy with the countries that are not members of the grouping.

• If the countries agree on common customs policy, they advance to a higher stage of integration – customs union.

• Another stage – common market – implies an additional free movement of people, capital, services and information.

• Economic union – involves monetary policy, including common taxes and currency. This stage requires the creation of transnational institutions that would coordinate or manage the monetary union, for example, a central bank that issues and controls the common currency.

• The most advanced form of integration is political union with a common government. The position of the countries is reduced, because the decisions are made by transnational institutions on behalf of all the members.

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Na ilustracji stopnie integracji gospodarczej. Schemat zawiera pięć stopni integracji gospodarczej (Stages of economic integration) w postaci kolorowych kwadratów i prostokątów wpisanych jeden w drugi. W środku najmniejszy, najniższy stopień – strefa wolnego handlu (free trade area - No restrictions on trade within the organization), dalej – unia celna (Customs union, Common customs policy), kolejno – wspólny rynek (Single market Free movement of people, capital, services, information), unia gospodarcza i unia polityczna (Economic union Common financial policy, common currency, transnational institutions, Political union Transnational institutions representing Member States, making decisions on their behalf) – największy, skrajny kwadrat.

European Union

The history of the European Union began in 1952 with creation of the European Coal and Steel Community which in 1957 was transformed into the European Economic Community. At the beginning, it was composed by 6 member states: France, Italy, (Western) Germany, Belgium, Luxembourg and the Netherlands. The success of the common market encouraged other countries to join the union. At the same time, the integration was deepening. The European parliament, now elected in the popular vote, was becoming increasingly important. The transnational institutions, like the European Central Bank, were established. At the end, in some countries common currency was introduced. Now the European Union has 28 member states.

Keywords

union, free market, free trade area

Glossary