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Regional Integration for and Against Article-EU Essay

With all complex political and economic ventures there are pros and cons. Regional integration is no different and has many benefits and risks. In order for one to gain a better understanding of the issue, it is necessary to examine both the advantages and disadvantages of regional integration. In this paper I will look at some of the advantages and disadvantages of regional integration in the European Union. I will also discuss the economic stages and growth of France and Austria. The European Union (EU) was created in the late 1950’s to bring about peace, equality, and the value of human rights. It has grown into one of the strongest regional groups in the world and has acquired a total of 27 members. With these values at the helm of the European Union’s work its membership has grown. Many countries flock to join the EU because of its numerous benefits. These benefits validate the formation of regional integration as an effective means to achieve peace, security, and prosperity.

There are many economic advantages of regional integration. It can produce bigger markets with more trading opportunities, while boosting competition and reducing prices for consumers. It has also been shown that integration introduces higher levels of domestic and foreign investment. EU has advanced by introducing common currency-Euros. The presence of a common currency is a benefit to consumers because some of the transaction costs are reduced. When members of EU trade there is not a need to buy or sell foreign currencies; therefore the losses of exchange is removed due to regional integration. In this situation firms are able to pass on their savings to consumers by reducing their prices. Trading generates a lot of wealth which helps European Union give its citizens a better life and future. The EU works to achieve fair trade and wants to ensure that its partners in developing countries can join their system. With the formation of the regional organization, firms are able to have greater and easier access to the markets of other members. This increases market size and allows firms to enjoy higher potential profits.

Firms also are able to have greater access to resources from other member’s states. This has been said to lower costs of inputs to allow them to increase their profits as well. Regional integration also allows firms to expand and increase profits and when profits and output increase, this will assist to promote economic growth in the country and the region. With regional integration member states have the support of other member states and this increases investors’ confidence in the region. With more confidence in a region investors are willing and able to invest in EU with confidence. All of these things will help EU to achieve its goal, promote growth and increase standard of living across the entire region. Austria and its economy greatly benefited after entry into the EU in the late 1990’s but with this interdependency Austria has become vulnerable to financial instability. A few of the banks there required assistance from the government such as nationalization. In an effort to strengthen banking groups Austria National Bank came up with a system of measures and moved up implementation of the Basel III rules.

They will continue to restructure and encourage greater labor flexibility and increase participation of labor to offset many of its problems. France came up with a series of economic plans that would provide a growing governmental direction of the economy. Some of their plans included an expansion of their basic sectors which exceeded the goals they set. Another plan was to create monetary stability and balance foreign payments. This increased production by 20% and brought forth a major economic expansion. France faced poor growth, lowered public finances, and elevated unemployment before joining the EU. After joining France moved into liberalization. Large shares of utilities and telecommunications were privatized. In spite of the European Union (EU) being most influential regional in the world many countries aren’t interested in joining. This is largely due to the disadvantages of regional integration. One disadvantage to regional integration would be the loss of sovereignty. To establish integration member nations are made to give up their sovereignty to a regional parliament, council, or other body.

This body will have authority and make decisions that may affect every member. Regional integration also makes it hard for national governments to issues and carries out policies based on what they need. These policies which may be beneficial to one member could hinder the economies of other member nations. (Alfredo, D. 2011) In regional integration members enjoy lower tariffs for trade but this could result in an unfair comparative advantage over non-member states. This would mean countries are no longer able to trade based on their comparative advantage because of the discriminatory tariffs and barriers that EU practices. When countries are unable to trade according to their comparative advantage, production is less efficient and they will no longer reap the benefits of free trade such as higher world output and lower prices.

Even though it has been argued that regional integration allows firms to gain greater access to markets of other member states and thus enjoy higher potential profits. Regional integration also exposes firms to greater competition from firms of other member states as well. Failure to compete with firms may cause local firms to close down. This will increase unemployment rate in the country. (Advantages & Disadvantages.2010) After reading this paper it appears evident that regional integration brings member nations together in times of prosperity and times of difficulty. The advantages and disadvantages discussed in this paper can each be seen as beneficial, harmful, or neutral, depending on what is going on in the world economy and the domestic situation of member nations.


Advantages & Disadvantages. Retrieved April 18, 2010 from:

Alfredo, D. 2011. Advantages & Disadvantages of Regional Integration. Updated on May 21, 2011

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