Models and Mechanisms of Economic Integration

Paweł Bożyk

Ekonomia journal, 2002, vol. 8

Abstract: In the paper, attempt at a model approach to economic integration was made. The hitherto known from the literature approach to this problem focussed onthe institutional criterion, i.e. on differences in the integration policy. The author introduced an additional criterion regarding the differences in the material links among the integrating countries. As a result, models of internationaland supranational integration were built.

The international integration model can yield satisfactory results where themain form of material connections in the integration process consists in horizontal links in the shape of product flows, thus under conditions of lack oftransferability of the productive factors. Existence of transferability of theproductive factors makes the integration process more complex, since horizontal links do not equal the vertical ones: in the trade among the integratingcountries the place of finished goods is taken over by subconsignment andco-operation links. As a result, trends appear towards supranational integration and substitution of the criterion of absolute advantage from integrationfor the criterion of comparative advantage.

The hitherto existing practice of economic integration has made an only limited use of the model analysis. The build-up of integration groups (fromthe European Coal and Steel Community up to the European Union) was carried outby the eclectic method. Under this method, elaboration of higher integrationforms resolves itself into introduction of successive corrections and supplements to the initial solution as a result of which the existing integration construction is transformed into a new, more developed form. A shortcoming inthe eclectic method approach is a waste of time and effort of the member countries, always accompanying the trial-and-error method.The model analysis permits to avoid such drawbacks.

Date: 2002
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