ABSTRACT
In this chapter, the author describes the conceptual basis, the historical roots and the institutional framework of integration. He discusses the theoretical foundations and empirical dynamics of the customs union and common market, with at their centre the freedom of movement of goods, services, labour and capital. To measure the progress of integration the author makes a distinction between indicators of a more economic nature, such as the share of trade in total gross domestic product, and the more policy-oriented indicators, such as the limitation of power of nation states in different segments of economic policy. Integration progress along the axes of deepening (new fields of competence) and widening (the geographical extension of the European Union). As economic integration is to be instrumental to the attainment of higher goals, the author evaluates its contribution to the growth and the distribution of welfare and to a number of non-economic objectives of integration.
