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CHAPTER VIII

CHAPTER VIII. INTERNATIONAL BUSINESS. REGIONAL ECONOMIC INTEGRATION. Learning Objectives. Define regional economic integration, and identify its five levels. Discuss the benefits and drawbacks associated with regional economic integration.

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CHAPTER VIII

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  1. CHAPTER VIII INTERNATIONAL BUSINESS REGIONAL ECONOMIC INTEGRATION

  2. Learning Objectives • Define regional economic integration, and identify its five levels. • Discuss the benefits and drawbacks associated with regional economic integration. • Describe regional integration in Europe, and its pattern of enlargement. • Characterize regional integration in Asia, and discuss how it differs from integration elsewhere. • Describe regional integration in the Middle East and Africa, and explain why progress there has been slow.

  3. WHAT IS REGIONAL ECONOMIC INTEGRATION? Regional Economic Integration (regionalism): Process whereby countries in a geographic region cooperate with one another to reduce or eliminate barriers to the international flow of products, people, or capital.

  4. WHAT IS REGIONAL ECONOMIC INTEGRATION? • Levels of Regional Integration • Free- Trade Area • Customs Union • Common Market • Economic Union • Political Union

  5. Levels of Regional Integration • Free- Trade Area: Economic integration whereby countries seek to remove all barriers to trade between themselves , but each country determines its own barriers against nonmembers

  6. Levels of Regional Integration • Customs Union : Economic integration whereby country remove all barriers to trade between themselves but erect a common trade policy against nonmembers

  7. Levels of Regional Integration • Common Market Economic integration whereby countries remove all barriers to trade and the movement of labor and capital between themselves but erect a common trade policy against nonmembers.

  8. Levels of Regional Integration • Economic Union Economic integration whereby countries remove barriers to trade and the movement of labor and capital, erect a common trade policy against nonmembers, and coordinate their economic policies.

  9. Levels of Regional Integration • Political Union Economic and political integration whereby countries coordinate aspects of their economic and political systems.

  10. Greater integration Levels of Regional Integration Free-Trade Area Customs Union Common Market Economic Union Political Union

  11. EFFECTS OF REGIONAL ECONOMIC INTEGRATION • Benefits of Regional Integration • Drawbacks of Regional Integration

  12. Benefits of Regional Integration • Trade Creation • Greater Consensus • Political Cooperation • Employment Opportunities

  13. Benefits of Regional Integration • Trade Creation Increase in the level of trade between nations that results from regional economic integration.

  14. Benefits of Regional Integration • Greater Consensus • The Benefits of trying to eliminate trade barriers in smaller groups of countries. • It can be easier to gain consensus from fewer members as opposed to.

  15. Benefits of Regional Integration • Political Cooperation • Be political benefits from efforts toward regional economic Integration. • A group of nations can have significantly greater political weight than each nation has individually.

  16. Benefits of Regional Integration • Employment Opportunities • Expand employment opportunities by enabling people to move from one country to another. • Simply to earn a higher wage.

  17. Drawbacks of Regional Integration • Trade diversion • Shifts in Employment • Loss of National Sovereignty

  18. Drawbacks of Regional Integration • Trade diversion Diversion of trade away from nations not belonging to a trading bloc and toward member nations

  19. Drawbacks of Regional Integration • Shifts in Employment Industries requiring mostly unskilled labor

  20. Drawbacks of Regional Integration • Loss of National Sovereignty Successive levels of integration require that nations surrender more of their national sovereignty

  21. INTEGRATION IN EUROPE • European Union • European Free Trade Association (EFTA)

  22. European Union • European monetary union • Enlargement of the European Union • Structure of the European Union

  23. European Union • European Monetary Union The European Union that established its own central bank and currency

  24. European Union • Enlargement of the European Union 1525 (May 2004) Some certain demands (Copenhagen Criteria): • Has stable institutions (democracy, law, Human Rights, Minorities) • Market Economy • Is able to assume the obligations of membership (economic, monetary, political union) • Adopt the rules and regulations of the community

  25. European Union • Structure of the European Union • European Parliament • Council of the European Union • European Commission • Court of Justice • Court of Auditors

  26. European Free Trade Association (EFTA) • European Free Trade Association (EFTA)

  27. INTEGRATION IN THE AMERICAS • North American Free Trade Agreement (NAFTA) • Andean Community • Latin American Integration Association (ALADI) • Southern Common Market (MERCOSUR) • Central America and the Caribbean • Free Trade Area of the Americas (FTAA) • Transatlantic Economic Partnership (TEP)

  28. North American Free Trade Agreement (NAFTA) • Local Content Requirements and Rules of Origin. • Effects of NAFTA • Expansion of NAFTA

  29. North American Free Trade Agreement (NAFTA)

  30. Andean Community • Main Objectives: • Tariff Reduction for Trade • Common Policies

  31. Andean Community • Latin American Free Trade Association (LAFTA) • Includes 5 South American Countries • Bolivia • Colombia • Ecuador • Peru • Venezuela

  32. Latin American Integration Association (ALADI) • Its main objective is the establishment of a common market, in pursuit of the economic and social development of the region. • Its members are: Argentina, Bolivia, Brazil, Cuba, Chile, Colombia, Ecuador, Mexico, Paraguay, Peru, Uruguay and Venezuela.

  33. Southern Common Market (MERCOSUR) • Customs Union • Members : • Argentina • Brazil • Paraguay • Uruguay • Venezuela

  34. Southern Common Market (MERCOSUR)

  35. Central America and the Caribbean • Caribbean Community & Common Market • Central American Common Market

  36. Caribbean Community & Common Market • Haiti • Jamaica • Montserrat • Saint Kitts and Nevis • Saint Lucia • Saint Vincent and Grenadines • Suriname • Trinidad and Tobago • Members: 15 • Antiqua and Barbuda • Bahamas • Barbados • Belize • Dominica • Grenada • Guyana

  37. Free Trade Area of the Americas (FTAA) • Anti & Barbuda • Argentina • Bahamas • Barbados • Belize • Bolivia • Brazil • Canada • Chile • Colombia • Costa Rica • Dominica • Dominican • Ecuador • El Salvador • Grenada • Guatemala • Guyana • Haiti • Honduras • Jamaica • Mexico • Nicaragua • Panama • Paraguay • Peru • Saint Kitts & Nevis • Saint Lucia • Saint Vincent • Suriname • Trinidad • US • Uruguay • Venezuela

  38. Transatlantic Economic Partnership (TEP) • The Transatlantic between US and EU

  39. INTEGRATION IN ASIA • Association of Southeast Asian Nations (ASEAN) • Asia Pacific Economic Cooperation (APEC)

  40. ASEAN

  41. ASEAN

  42. ASEAN

  43. ASEAN • Members 10 • Brunei • Myanmar • Cambodia • Indonesia • Laos • Malaysia • Philippines • Singapore • Thailand • Vietnam

  44. INTEGRATION IN THE MIDDLE EAST AND AFRICA • Gulf Cooperation Council (GCC) • Economic Community of West African States (ECOWAS)

  45. Gulf Cooperation Council (GCC) • Members: • Bahrain • Kuwait • Oman • Qatar • Saudi Arabia • The United Arab Emirate

  46. Economic Community of West African States (ECOWAS) • Formation of a customs union and eventual common market and monetary union. • Ecowas nations comprise a large portion of the economic activity in sub-Saharan Africa.

  47. THE END

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