Economic Integration and Interdependencies
International trade promotes interdependencies since
nations while acquire what they lack and export what they have
in surplus. Conventionally, nations were mostly limited to their national market,
while external markets were protected by high tariffs. Low trade
levels involved low levels of interdependency and economic
efficiency. Through globalization a decline in the relative costs
of many commodities,
parts and finished goods, took place.
This is supported by lower transport costs, the exploitation of comparative advantages,
a reduction in tariffs and larger consumption markets, expanding economies
Globalization underlines a decreasing impact of boundaries in
the geography of international trade, in proportion to the level of
interdependency. Economic integration
processes, notably free-trade agreements, have established common tariff
policies among groups of nations (such as G1 and G2) having a high
level of interdependency.
Multilateral agreements have also helped establishing an increasingly
deregulated global trading environment.