🤝 Economic integration

Economic integration refers to the process by which countries coordinate and link their economic policies. The levels of integration can be arranged from least integrated to most integrated as follows:

✅ Correct Order (Least to Most Integrated):

🔹 (1) Free Trade Area
📌 Countries remove tariffs and quotas among themselves, but each maintains its own external trade policies.
📍 Example: NAFTA/USMCA.

🔸 (2) Customs Union
📌 Free Trade Area + Common external tariffs on imports from non-member countries.
📍 Example: MERCOSUR.

🔹 (3) Common Market
📌 Customs Union + Free movement of factors of production like labor and capital.
📍 Example: European Economic Area (EEA).

🔸 (4) Economic Union
📌 Common Market + Harmonization of economic policies, possibly including a common currency.

📍 Example:
An Economic Union involves a high level of integration among member states, including the harmonization of economic policies, common currency, and often the establishment of supranational institutions that can make binding decisions for member countries. This supranational organizational structure goes beyond economic coordination — it may involve shared sovereignty in areas like monetary policy, fiscal rules, and legal regulations.

The European Union (EU) is the best-known example of an economic union with supranational elements, including a central bank, parliament, and commission that have authority over national governments in specific areas.

🔹 (5) Economic Cooperation / Political Union
📌 The most advanced stage — combines economic union + unified political institutions and governance.
📍 Example: Hypothetical, but the United States of America is often cited as a close example.