Final answer:
Harmonization of accounting standards across countries provides consistency in business practices, maintaining a level economic playing field and reducing the need for tariffs. It benefits small exporting countries by preventing supply curve shifts that can affect exports and pricing. Furthermore, it underpins the operational efficacy of economic unions and common markets.
Step-by-step explanation:
Harmonizing accounting standards across countries ensures accounting practices are consistent, facilitating global economic integration. An important goal of harmonization is to provide a level playing field for all businesses, ensuring that foreign firms are treated the same as domestic ones, based on objective, scientific standards. By reducing economic distortions, a common standard across countries can be seen as a "first best" policy from an economic standpoint.
Without harmonized standards, costs can escalate for businesses that must comply with multiple, disparate sets of regulations, particularly for small exporting countries. If standards increase, the supply curve can shift, potentially decreasing exports and raising prices. On the other hand, harmonized standards can mitigate these issues by reducing the need for tariffs, which are a "second best" policy that could negatively impact other sectors.
An economic union or common market, with its integrated trade policies and fiscal and monetary coordination, exemplifies the benefits of adopting harmonized standards across member countries. This integration supports free trade within the group while maintaining a common stance on external trade policies, illustrating the importance of standardized practices for economic collaboration.