common market


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Common market

An agreement between two or more countries that permits the free movement of capital and labor as well as goods and services.

Common Market

1. A market with the free movement of goods, services, labor, and capital between two or more places. For example, even though Texas and Oklahoma are different places with different governments and regulations, the two have a common market because workers do not need permission to move between them, and one may transfer money between them without incurring any tariffs or fees. See also: Free trade.

2. An informal term for the European Economic Community.

Common Market

common market

see TRADE INTEGRATION.

common market

a form of TRADE INTEGRATION between a number of countries in which members eliminate all trade barriers (TARIFFS, etc.) amongst themselves on goods and services and establish a uniform set of barriers against trade with the rest of the world, in particular, a common external tariff (see CUSTOMS UNION). In addition, a common market provides for the free movement of labour and capital across national boundaries. The aim of a common market is to secure the benefits of international SPECIALIZATION, thereby improving members’ real living standards.

The short- and medium-term impact of the formation of a common market is mainly felt through an increase in trade between member countries. TRADE CREATION is typically associated with a reallocation of resources within the market favouring least-cost supply locations and a reduction in prices resulting from the elimination of tariffs and lower production costs. (See GAINS FROM TRADE.)

In addition, a common market can be expected to promote longer-term (dynamic) changes conducive to economic efficiency through:

  1. COMPETITION. The removal of tariffs, etc., can be expected to widen the area of effective competition; high-cost producers are eliminated, while efficient and progressive suppliers are able to exploit new market opportunities;
  2. ECONOMIES OF SCALE. A larger ‘home’ market enables firms to take advantage of economies of large-scale production and distribution, thereby lowering supply costs and enhancing COMPARATIVE ADVANTAGE;
  3. TECHNOLOGICAL PROGRESSIVENESS. Wider market opportunities and exposure to greater competition can be expected to encourage firms to invest and innovate new techniques and products;
  4. INVESTMENT and ECONOMIC GROWTH.

Finally, the virtuous circle of rising income per head, growing trade, increased productive efficiency and investment may be expected to combine to produce higher growth rates and real standards of living.

The EUROPEAN UNION is one example of a common market. See ANDEAN PACT.

References in periodicals archive ?
On 10 August, UNISFA facilitated a follow up meeting of the joint peace committee at Amiet to work out the modalities, resulting in a written agreement to formally reopen the common market there on 15 August," further noted the statement, adding that "Humanitarian partners, and UNISFA, supported the common market with water and sanitation facilities".
Africa Common Market with the company managing director Kamlesh Shah indicating last year the company looked forward to "extend our operations in Eastern Africa to help in the distribution of our wide range of paints both in existing and new markets.
Although the similar nature of its exportable goods constitute an obstacle to further increases in trade among Gulf nations, the customs union and common market will facilitate the smooth movement of goods and investments and allow more joint ventures.
Muslim countries should do their best to set up joint banks, use common currencies and establish common markets to ease trade among their private sectors, said Torkan, according to the Islamic Republic News Agency.
The survey revealed that despite good onion harvests, farmers still remain poor as most of them are unaware of the potential market opportunities available in the EAC common market.
A decade later most of those ships and jobs were lost to the Common Market and Common Agricultural Policy.
As Mr Murray rightly points out, we voluntarily entered into a Common Market.
WHEN Harold Wilson and Ted Heath in the sixties were determined to take us into the Common Market (EU), and eventually did, I wrote opposing this move.
The forum aims at activating the Gulf common market due to its importance in opening up fields for trade exchange, expanding horizons of investment and facilitating mutual economic activities among the AGCC citizens.
ANKARA, Dec 15, 2010 (TUR) -- Turkish State Minister & Chief Negotiator Egemen Bagis will travel to Brazil on Wednesday to attend 40th Common Market of the South (MERCOSUR) summit and ministerial meeting.
Summary: KHARTOUM, July 10, 2010, SPA -- Northern and southern Sudanese leaders on Saturday said they would consider forming a confederation or a common market if southerners chose to declare independence in an upcoming referendum, Reuters reported.
Synopsis: Services, capital, and labor should move more freely when the East African Community (EAC) common market opens Thursday, but people will still need permits to work in most of the five partner states.

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