🔗 Stages of Economic Integration
Economic integration occurs when countries agree to reduce trade barriers between themselves. Integration deepens through several stages:
Preferential trade agreement (PTA).
Free trade area (FTA).
Customs union.
🏦 Deeper Integration
Common market.
Monetary union.
| Stage | Free trade | Common external tariff | Free factor movement | Shared currency |
|---|---|---|---|---|
| PTA | Partial | No | No | No |
| FTA | Yes | No | No | No |
| Customs union | Yes | Yes | No | No |
| Common market | Yes | Yes | Yes | No |
| Monetary union | Yes | Yes | Yes | Yes |
Memorise this table — the IB loves asking you to compare and contrast different stages of integration.
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🌍 Key Trading Blocs to Know
- EU (European Union) — customs union + common market + monetary union (Eurozone). 27 members. The most deeply integrated bloc.
- USMCA — free trade area (USA, Mexico, Canada). Replaced NAFTA in 2020.
- ASEAN — Association of Southeast Asian Nations. Aims for FTA and deeper integration among 10 members.
- AfCFTA — African Continental Free Trade Area. The world's largest FTA by number of countries (54 members).
- Mercosur — customs union in South America (Brazil, Argentina, Uruguay, Paraguay).
- RCEP — Regional Comprehensive Economic Partnership. 15 Asia-Pacific countries.
You don't need to know every bloc — but having 2–3 real-world examples ready for essays shows strong application skills.