Economic integration simply means the association of countries, with common interests to remove trade barriers or other obstacles that affect the free flow of goods and services across their borders. The ultimate aim is to increase the economic welfare of the member countries through transparent competition, specialisation and greater investment. This is easier when the countries have common boundaries or are in the same sub-region, and have some common identity. The Economic Community of West African States (ECOWAS), European Economic Community (EEC), are good examples of economic integration.
Types of Economic Integration
There are a number of different stages of economic integration.
(i) Free-Trade Area:
This is the most elementary form of integration. In this type of integration, member countries agree to remove all forms of barriers to trade among them. Tariffs, quotas, etc., are not imposed on goods coming from or going to member countries. However, each country retains the right to determine its commercial policies towards non-member countries. Free trade area encourages specialisation and increases production among member countries.
(ii) Customs Union:
Customs union is a more unionised association of member countries. It not only maintains free trade with one another, but imposes common external tariff on non-member nations. However, it differs from free-trade area because free-trade area gives the member countries the privilege to charge different tariff rates against non-member countries; but customs union permits all members to charge the same tariffs rate against non-member countries.
(iii) Common Market:
A common market is a more advance form of economic integration. Members abolish tariffs among themselves, maintain uniform external tariffs and in addition, allow free movement of factors of production between members. European Economic Community (EEC) is a good example of common market.
(iv) Economic Union:
An economic union is the most sophisticated form of economic integration. It has all the features of a common market, plus the coordination and harmonisation of socio-economic policies among members as all member countries adopt the same currency, monetary and financial policies. No economic association has, so far, attained this level of integration since its methodology makes all member countries one economic nation.
Economic Integration In Africa
The development of economic integration in Africa has been considerably influenced by the market experiments in Europe particularly since the second world-war. When the African countries gained independence, each independent state became a separate political and economic entity.
Therefore, the need for economic groupings arose thereafter, to bring together countries to solve common economic problems. Among those regional economic groupings were:
(i) East Africa common market (EAC).
(ii) The West African Union.
(iii) The French West African Customers Union.
(iv) Central African Customs and Economic Union.
(v) The West African Monetary Union.
(vi) The Afro-Malagasy Common Organisation.
(vii) West African Free Trade Area.
(viii) Economic Community of West African States (ECOWAS).
Problems of Economic Integration in Africa
1. The areas of the communities are not large enough. This does not guarantee the scope for trade creation.
2. Trade among member countries is not substantial enough for trade creation. In most cases, the trading pattern is a product of past colonial relationships.
3. Resources are not enough to support profitable joint projects from within the region.
4. African economies are complementary rather than competitive. They produce about the same set of products, usually primary products.
5. There is a great danger of political fragmentation as a militating factor in African economic integration. As a result of fragmentation, there are great diversities in religion, political ambition, economic planning and development thrust.
Although, the traditional arguments for economic integration are not present in African countries, this is, however, not to say that African countries should not engage in economic integration. They can still do so with the long-term objective of altering the structure of their economies and achieving economic development.