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Regional Integration

Introduction

Regional integration is the economic agreement between partner states to have a common market for example the European Union. The integration is meant to bring together partnership in business and create a healthy business, increase variety of products and development of a good business environment. The free trade encourages a liberated business hub with little sanctions to operate in. though the market might be liberated, it is also a risk because it depends on policies made courtesy of mutual agreement also it can be affected by country's politics (World Bank, 2009)

Advantages of Regional Integration

1. Competition is good in that it breaks monopoly enjoyed for long by single companies. Incoming competitors will bring specialization on the participating states. A company that used to produce products in a wider market will have to specialize on certain area therefore increasing the quality of products sold in the market (Kabbaj, 2002)

2. Increase in quality of goods that are processed. Entry of new products will encourage search for customers' confidence through production of high quality goods and services (Safadi, 2001)

Disadvantages of Regional Integration

1. Business integration can be a disadvantage to nations that have less developed and inferior products. They are likely to be faced by foreign goods therefore losing in terms of jobs and national revenue (Safadi, 2001)

2. Some foreign companies might come up with cheap low quality goods to the market therefore reducing the standards of goods sold in the market (Lombaerde, 2008)

Governments can shield small businesses by setting policies that can balance business trading among small and big companies. For examples subsidizing small businesses and taxing large business. The move will benefit small company by evading from high production cost. The small businesses are also encouraged to trade within their vicinity as the multi international companies concentrate on international markets. Small businesses with the same products may be integrated together to aid in competing with bigger companies (Kabbaj, 2002)

Regional trading is accompanied by good policies made by the respective governments. For healthy trading to be accomplished, policies made should favor all parties involved.

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