#ADVANTAGES OF TRADING BLOCS FREE#

Terminology Ī common market is seen as a stage of economic integration towards an economic union or possibly towards the goal of a unified market.Ī single market is a type of trade bloc in which most trade barriers have been removed (for goods) with some common policies on product regulation, and freedom of movement of the factors of production ( capital and labour) and of enterprise and services. However, scholars and economists continue to debate whether regional trade blocs fragment the global economy or encourage the extension of the existing global multilateral trading system.

#ADVANTAGES OF TRADING BLOCS FREE#

Those who advocate for it claim that global free trade is in the interest of every country, as it would create more opportunities to turn local resources into goods and services that are both currently in demand and will be in demand in the future by consumers. Trade blocs are seen by them to encourage regional free trade at the expense of global free trade. Some advocates of global free trade are opposed to trading blocs. Schott of the Peterson Institute for International Economics notes that members of successful trade blocs usually share four common traits: similar levels of per capita GNP, geographic proximity, similar or compatible trading regimes, and political commitment to regional organization.

By 1997, more than 50% of all world commerce was conducted within regional trade blocs. Surges of trade bloc formation occurred in the 1960s and 1970s, as well as in the 1990s after the collapse of Communism.

Historic trading blocs include the Hanseatic League, a Northern European economic alliance between the 12th and 17th centuries, and the German Customs Union, formed on the basis of the German Confederation and subsequently the German Empire from 1871.

Advantages of trading blocs