ABSTRACT
This chapter begins with an outline of the concepts and forms of integration. This leads to a discussion of the political element related to the integration of southern Africa since the end of the nineteenth century. The chapter deals with the comparative static welfare effects of customs unions, i.e. with the reorganization of production with a given amount of resources. The magnitude of trade creation and trade diversion and the corresponding welfare effects depend on the initial pre-union tariff rates and on the common external tariff rate of the customs union. Political and strategic motives have been of great importance for the origin and development of economic integration in southern Africa. The traditional theory of economic integration deals with some questions as well as with the effects of integration on resource allocation, specialization and welfare. The economic analysis of what is lost or gained by imposing tariffs focuses on the tariff-induced changes of prices and on tariff revenue considerations.
