Theory of Integration and Policies of the Union-myassignmenthelp

Question: Discuss about theTheory of Integration and Policies of the Union. Answer: Introduction International trade theories had been focused on a country exchanging goods or services that it specializes in (Hill, 2008). The principle of comparative advantage proposed by David Ricardo stated that a country in free trade produce more of a good that it specializes in. This theory emerges from an economic reality that describes gains from trade emerging from factor endowments or technological progress. European Union is a major example of economic integration and free trade agreement. However, theories of Integration and Policies of the European Union are currently facing challenges of globalization. Regional integration and opening markets to some worldwide levels, EU was expected to focus more on international trade theories. Such trends have not been noted across the EU, meaning there has been disappearance of no sectors or sectoral adjustments (Bickerton, Hodson Puetter, 2015). On the contrary, EEC has not concentrated on increase in sectoral trade or sectoral imports or expo rts. The scope of this analysis deals with international trade and its importance with current alternance between free-trade and protectionism. Analysis Globalisation and international trade brings immense benefits as well as opportunities. EU faces increased competition in all its traded services as well as goods (Farole, Rodrguez?Pose Storper, 2011). Theories of international trade proposes countries exporting items in which they would specialize. It emphasizes on a countrys capability to manufacture a specific product or service at a low costs compared to other countries, such that it is advantageous to other countries to import the item. Globalization allows EU access to greater markets along with source of technology and finance. Globalisation is a greater manifestation of international trade that allows countries to easily export its expertise anywhere in the world. EU has uniquely partnered with its member states but members have pooled sovereignty in varied harmonized laws and policy areas of economic and political issues. EU has a customs union where exchange of goods, people, service and capital takes place, known four fre edoms with a common trade policy (Arribas, Perez Tortosa-Ausina, 2009). Globalization has capabilities to bring about several benefits to a country as foreign direct investments, technological innovations and economies of scale and so on. Countries that have globalized so far have benefitted from investments into their country and especially from economies of scale. Countries that globalize tends to produce goods and services in which they have factor benefits in large scale. They tend to benefit from low cost of production in their country by exporting it to a country that does not have such factor endowments. European Union with its integration does not yet enjoy an integrated political system or an integrated economic policy (Jones Kierzkowski, 2018). Meaning countries even posts formation of EU have continued maintaining their production capability and indulging in similar trades. They consider themselves as separate units instead of considering themselves as a single entity, which can be seen evident from past crisis in Greece or Brexit vote out. These individualistic trends have not allowed benefits of global economy percolate to its member states. As for example Germany in EU specializes in engineering innovations since historical pasts, instead of innovative leadership and automobile engineering leadership, there are other companies in EU that are spending huge amounts of money into such specialization. As for example DS, Opel, Peugeot in France, Iveco in Spain and Namco in Greece are investing huge amount of money into research and development activities. France has huge vineyards and specializes in production of high quality wines. This does not imply that member states in EU does not makes wine or have research and development spending on them (McCann Ortega-Argils, 2015). On the contrary other countries within the EU are also concentrating on multiple types of wine production. This implies there are much deeper policies within EU member states that prevents a competitive Europe from emerging. In a globalized world, EU member states have been facing immense crisis in their job loss due to internal competition. EU extends itself as separate member states instead of being one which lead to loss in private jobs, Europe has been not adding new jobs since the 1970s German Market Research firm GfK reflects on unemployment being a major social problem deterring globalisation. Less regulated markets for creating competencies in jobs have deterred EU nationals with progress in Asian, US and other country nationals. Taking advantage of immigration and globalisation, laborers from Poland and other Muslim countries are finding jobs in EU. Aging and shrinking population in EU has been a rising concern that gets substituted by immigrant workers (Paasi, 2009). There had been several summits to enhance competitiveness in European markets for various products and services, but not much has been achieved. Various pending reforms in labor markets, energy dependency, innovation, falling demog raphics and unemployment remain unattended. In order to compete in a globalized world, where every country is offering its specialization to gain maximum benefits from it, EU is lagging far behind. Most important trade theory as David Ricardos focuses on competitive advantage of a single country. It is a comparative advantage theory where each country takes advantage of its own resources based on its factor endowments (Helpman Razin, 2014). Post formation of the EU there had been no such policies that focus on individuality of the constituency. Though there is free trade amongst the countries in the EU, the countries together do not export specialized items or imports them. Intra-sector trade sensitiveness has not been accommodated with increase in exports and imports in sectors. Importance of intra-sector trade within EU would have capabilities to expand trade capabilities along for better globalization. Countries would have been able to identify key areas in which their strengths and weaknesses lies. This implies EEC countr ies would now each recognize their position in the global economy and then develop capabilities that would allow them to position themselves in the world economy (Zhang, 2008). Germany recognizing its capabilities to manufacture automobiles on a large scale. France manufacturing wine, Greece focusing on manufacturing of chemicals and so on. In order to gain economies of scale advantage EU need to identify each countrys specialization. Conclusion The above discussion clearly states that though international trade is extremely important, EU has not acted on a joined platform to extend its resources and sectoral advantages. Though EU constitutes a congruence of several member states, it has not been able to take advantage of the same from its concept of protectionism. Each member country has their own economic policies and political outlook that prevents them from indulging in free trade as had been traditionally proposed in David Ricardos theory. Each member state within EU has their own economic policies that aim at protecting their industries. Though they have entered into an arrangement but still they have not able to align themselves totally (Barca, McCann Rodrguez?Pose, 2012). Therefore, EU continues to face challenges of globalization instead of accommodating theories and policies of integration. 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