Economic integration is an economic arrangement between different regions, marked by the reduction or elimination of trade barriers and the coordination of monetary and fiscal policies. The aim of economic integration is to reduce costs for both consumers and producers, and to increase trade between the countries taking part in the agreement.
The transfer of capital between countries either by the import or export of securities, dividend payments or interest payments. For instance, when Japanese investors purchase American securities, the payment will be in dollars. Hence, a demand for the dollar is created, necessitating an increase in the dollar's exchange rate. Conversely, an American company would have to buy yen in order to pay its creditors. This would cause a demand in yen and the price of yen would increase in terms of dollars.
