chapter viii
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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. - PowerPoint PPT PresentationTRANSCRIPT
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CHAPTER VIII
REGIONAL ECONOMIC INTEGRATION
INTERNATIONAL BUSINESS
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Learning ObjectivesDefine 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.
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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.
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WHAT IS REGIONAL ECONOMIC INTEGRATION?
Levels of Regional IntegrationFree- Trade AreaCustoms UnionCommon MarketEconomic UnionPolitical Union
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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
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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
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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.
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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.
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Levels of Regional Integration
Political Union
Economic and political integration
whereby countries coordinate aspects
of their economic and political
systems.
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Levels of Regional Integration
Free-Trade Area
Customs Union
Common Market
Economic Union
Political Union
Greater integration
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EFFECTS OF REGIONAL ECONOMIC INTEGRATION
Benefits of Regional Integration
Drawbacks of Regional Integration
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Benefits of Regional Integration
Trade CreationGreater ConsensusPolitical CooperationEmployment Opportunities
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Benefits of Regional Integration
Trade CreationIncrease in the level of trade between nations that results from regional economic integration.
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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.
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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.
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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.
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Drawbacks of Regional Integration
Trade diversionShifts in Employment Loss of National Sovereignty
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Drawbacks of Regional Integration
Trade diversion
Diversion of trade away from nations
not belonging to a trading bloc and
toward member nations
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Drawbacks of Regional Integration
Shifts in EmploymentIndustries requiring mostly unskilled labor
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Drawbacks of Regional Integration
Loss of National Sovereignty
Successive levels of integration
require that nations surrender more
of their national sovereignty
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INTEGRATION IN EUROPE
European Union
European Free Trade Association
(EFTA)
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European Union
European monetary union
Enlargement of the European Union
Structure of the European Union
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European Union
European Monetary Union
The European Union that established
its own central bank and currency
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European UnionEnlargement of the European Union
1525 (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
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European Union
Structure of the European Union• European Parliament
• Council of the European Union
• European Commission
• Court of Justice
• Court of Auditors
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European Free Trade Association (EFTA)
European Free Trade Association (EFTA)
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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)
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North American Free Trade Agreement (NAFTA)
Local Content Requirements and
Rules of Origin.
Effects of NAFTA
Expansion of NAFTA
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North American Free Trade Agreement (NAFTA)
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Andean Community
Main Objectives:
Tariff Reduction for Trade
Common Policies
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Andean CommunityLatin American Free Trade Association (LAFTA)
Includes 5 South American Countries
Bolivia
Colombia
Ecuador
Peru
Venezuela
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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.
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Southern Common Market (MERCOSUR)
Customs Union
Members : • Argentina • Brazil • Paraguay • Uruguay• Venezuela
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Southern Common Market (MERCOSUR)
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Central America and the Caribbean
Caribbean Community & Common
Market
Central American Common Market
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Caribbean Community & Common Market
Members: 15 Antiqua and
Barbuda Bahamas Barbados Belize Dominica Grenada Guyana
Haiti Jamaica Montserrat Saint Kitts and Nevis Saint Lucia Saint Vincent and
Grenadines Suriname Trinidad and Tobago
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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 Guatemal
a Guyana Haiti Honduras Jamaica Mexico Nicaragua Panama
Paraguay Peru Saint Kitts &
Nevis Saint Lucia Saint Vincent Suriname Trinidad US Uruguay Venezuela
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Transatlantic Economic Partnership (TEP)
The Transatlantic between US and EU
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INTEGRATION IN ASIA
Association of Southeast Asian
Nations (ASEAN)
Asia Pacific Economic Cooperation
(APEC)
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ASEAN
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ASEAN
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ASEAN
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ASEAN
Members 10 Brunei Myanmar Cambodia Indonesia Laos
Malaysia Philippines Singapore Thailand Vietnam
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INTEGRATION IN THE MIDDLE EAST AND AFRICA
Gulf Cooperation Council (GCC)
Economic Community of West
African States (ECOWAS)
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Gulf Cooperation Council (GCC)
Members:
• Bahrain
• Kuwait
• Oman
• Qatar
• Saudi Arabia
• The United Arab Emirate
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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.
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THE END