Advantages and negative effects of international integration processes. Mercosur example

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Advantages and negative effects of international integration processes. MERCOSUR example.

Integration is a very important process nowadays. There are many different integration groups of states at this time. They have a great influence on the present political and economic situation in the modern world. Generally speaking, the consequences of the processes are positive but there are some negative tendencies caused by them.

It is really important to distinguish economy from a process of political integration despite of their tight interdependence. International economic integration is regarded as a consciously directed process of cooperation, convergence of national economies, which provides the movement of goods, services, capital and labor force between countries. The main aim of this process is to increase trade between the countries through negotiation. The essential part of economic integration is the division of labour, which results in the increase in general effectiveness. One of the neoliberal scientists, a hungarian economist B.Balassa marks out five stages of economic integration:

  1. Free Trade Area

  2. Customs Union

  3. Common Market

  4. Economic Union (its highest form is monetary fiscal union)

  5. Total economic and political integration1.

Balassa emphasizes the intensive government participation in economy so, according to him, the last stage of integration is not only an economic union but also political one because of supranational common markets, with their free movement of economic factors across national borders. In summary, political integration is a process, as a result of which united political community is established in different states (political units)2.

In the modern world the European Union is known as the most developed economic union. It is placed at the forth stage of integration, according to Balassa, and has the common currency. However similar processes progress everywhere. One of the promising regions is Latin America. Many researches in this sphere note that it has a rapid growth of economy according to statistics. The World Bank Vice President for Latin America and the Caribbean Hasan Tuluy in the interview with the Spanish newspaper “El País” spoke about results achieved by this region. He noticed that about 60 million of population cease living on the breadline and the gap between the rich and poor had been reduced. Also he said that this region had overcome the world financial crisis effectively3. His words can be proved by such indices as GDP, import, export, unemployment rate and others. For example, Brazil´s GDP permanently has been rising4. The export and import in this country increase even (/uniform, proportional?), so the trade balance is mostly positive. The rate of unemployment decreases by degrees. So, according to the indices, the economy of Brazil grows.

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