Global Business Today, 5e

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chapter
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• Regional Economic Integration

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Chapter 8 Regional Economic Integration

• INTRODUCTION
• Regional economic integration refers to
  agreements between countries in a geographic
  region to reduce tariff and nontariff barriers to
  the free flow of goods, services, and factors of
  production between each other.
• While regional trade agreements are designed to
  promote free trade, there is some concern that
  the world is moving toward a situation in which a
  number of regional trade blocks compete against
  each other.

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Chapter 8 Regional Economic Integration

• LEVELS OF ECONOMIC INTEGRATION
• There are five levels of economic integration
• Free trade area
• Customs union
• Common market
• Economic union
• Political union

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Chapter 8 Regional Economic Integration

• THE CASE FOR REGIONAL INTEGRATION
• The case for regional integration is both
  economic and political.
• The Economic Case for Integration
• The Political Case for Integration
• Impediments to Integration

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Chapter 8 Regional Economic Integration

• THE CASE AGAINST REGIONAL INTEGRATION
• Regional economic integration only makes sense
  when the amount of trade it creates exceeds the
  amount it diverts
• Trade creation occurs when low cost producers
  within the free trade area replace high cost
  domestic producers
• Trade diversion occurs when higher cost suppliers
  within the free trade area replace lower cost
  external suppliers

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Chapter 8 Regional Economic Integration

• REGIONAL ECONOMIC INTEGRATION IN EUROPE
• There are two trade blocks in Europe the
  European Union (EU) and the European Free Trade
  Association. Of the two, the EU is by far the
  more significant, not just in terms of
  membership, but also in terms of economic and
  political influence in the world economy.

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Chapter 8 Regional Economic Integration

• Evolution of the European Union
• Political Structure of the European Union
• The Single European Act
• The Establishment of the Euro
• Enlargement of the European Union

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Chapter 8 Regional Economic Integration

• REGIONAL ECONOMIC INTEGRATION IN THE AMERICAS
• Regional economic integration is on the rise in
  the Americas. The North American Free Trade
  Agreement (NAFTA) is the most significant
  attempt.
• Other efforts include the Andean group and
  MERCOSUR.
• In addition, there are plans to establish a
  hemisphere-wide Free Trade Area of the Americas
  (FTAA).

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Chapter 8 Regional Economic Integration

• The North American Free Trade Agreement
• The Andean Community
• MERCOSUR
• Central American Common Market, CAFTA and
  CARICOM
• Free Trade Area of the Americas

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Chapter 8 Regional Economic Integration

• REGIONAL ECONOMIC INTEGRATION ELSEWHERE
• Various efforts at economic integration are
  taking place in other parts of the world.
• Association of Southeast Asian Nations
• Asia Pacific Economic Cooperation
• Regional Trade Blocs in Africa

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Chapter 8 Regional Economic Integration

• IMPLICATIONS FOR MANAGERS
• Regional economic integration creates both
  opportunities and threats for managers.
• Opportunities
• Threats