Describe the disadvantages of economic integration for inter

Describe the disadvantages of economic integration for international businesses. How can firms protect themselves from these threats

Solution

Economic integration is a process of arrangement between different regions which implies reducing trade barriers in order to facilitate trade and reduce costs for both producer and consumer. Despite all the advantages there are costs associated with economic integration. The disadvantages include trade diversion and destroying national sovereignty.

As economic integration increases, it lessens trade barriers and it leads to political integration as well. A lot depends on the dynamics of trade creation and trade diversion. Hence a coherence policy is a must to balance economic unions being a part of economic integration