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Difficulty: HardTransportation, Trade, and Economic Groupings in Africa

Regional economic groupings in Africa (such as ECOWAS, EAC, and SADC) pursue economic integration through distinct developmental phases. Arrange the following stages of regional economic integration in sequential order from the lowest degree of trade cooperation to the highest level of economic integration.

  1. 1Preferential Trade Area (reduction of tariffs on selected goods traded among member countries)
  2. 2Free Trade Area (complete removal of internal tariffs and trade quotas among member states)
  3. 3Customs Union (adoption of a unified Common External Tariff on imports from non-member nations)
  4. 4Common Market (free mobility of factors of production, including labor and capital, across borders)

Answer

The correct sequence from lowest to highest degree of economic integration is: Preferential Trade Area, Free Trade Area, Customs Union, and Common Market.
Economic integration progresses sequentially: preferential reduction of tariffs on specific goods (Preferential Trade Area), followed by complete elimination of internal trade barriers (Free Trade Area), then the implementation of a shared external tariff for outside countries (Customs Union), and finally the free movement of production factors like labor and capital across member boundaries (Common Market).

Step-by-Step Solution

1
Identify the foundational level of commercial cooperation.
Preferential Trade Area is identified first as it only lowers tariffs on selected products without removing them entirely.
Initial trade agreements among developing economic blocs start with partial tariff concessions.
2
Determine the next phase where internal trade barriers are eliminated.
Free Trade Area comes second as internal tariffs are completely abolished while countries retain separate tariffs against non-members.
Total internal tariff elimination is the defining step of a free trade area.
3
Identify the transition to a joint external trade policy.
Customs Union comes third as member countries establish a unified Common External Tariff (CET) for outside nations.
Harmonizing external trade policies transforms a free trade area into a customs union.
4
Identify the advanced phase permitting factor mobility.
Common Market is the final and highest stage listed, adding free movement of capital, labor, and services across national borders.
Factor mobility represents deeper socio-economic integration beyond product trade.

Key Concept

Stages of Regional Economic Integration in Africa
Estimated Time:1m 30s
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Topics

Transportation, Trade, and Economic Groupings in Africa

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