2… Article One (In favor of regional integration)Regional integration in North America has faced opposition but not surprisingly, much support as well. Some of the advantages are, * Foreign Direct Investments (FDI) stimulates economic growth through the sharing of technology, marketing channels, managerial know-how and to … With regional integration member states have the support ... of free trade such as higher world output and lower prices. Regional integration is, in essence, a double-edged sword, or a bitter-sweet solution for economic growth and prosperity, with its advantages and disadvantages; it is a risk that many countries are willing to take. Opposition also came in Mexico from some who feared that the U.S. and Canada would use Mexico as a low-cost assembly site, while keeping their high-paying, high-skilled jobs north of the border (Hill). The decline in trade between the blocs would be greater than the gains of trade within them. Due to a reduction or removal of tariffs, cooperation results in cheaper prices for consumers in the bloc countries. 1. First of all, economic integration has its costs, and involves painful adjustments. Although there exists those who are opposed to regional integration, it remains a tool that can create unity, security, and free trade for nations that need it. Open access to a larger export market. EMCs also give better focus on exporting, as most firm such as Cola Delight give priority to their domestic problems. However, this would impact the local producers as the imported goods would have a lower price than the local goods, then the consumers would shift to buy the imported goods instead. Hence, a country must first learn about the pros and cons of being a trading bloc member before it decides to join the group. A company must have enough resources available to set up or purchase factories that can produce items for sale. Retrieved February 14, 209, from http://www.freetrade.org/pubs/FTBs/FTB-001.htmlHill, C. W. (2009). b) Introduction of free trade and trade agreement Regional integration has been a successful economic tool for the Unites States, Canada, and Mexico, by bringing about unity and helping to reform the economies of each country. The main objective of this is to cut expenses of customers and suppliers and to expand the trade. The region has established its own set of guidelines concerning its members. It is beneficial that manufacturing would be moved to Mexico where labor is less expensive, and today many businesses have taken profitable advantage on this cost-saving opportunity. "EU and Japan Sign Trade Deal Covering a Third of the World's Economy," Accessed Jan. 8, 2020.Office of the United States Trade Representative. The phenomenon of regional integration. The region has established its own set of guidelines concerning its members. Trade gains are one of the major advantages of regional integration for individual member states. It is the first stage of economic integration. Regional economic integration has mainly one overall disadvantage that economists say has often been ignored. 2019 words (8 pages) Essay. standards. Advantages: Import tariffs are introduced for the protection of the local economy/industry. Since the three countries entered regional integration through the NAFTA agreement, trade and investment has expanded and trade among the NAFTA nations has more than tripled from $297 billion to $930 billion, and business investment has risen by 117% since 1993 (U.S. Trade Representative [USTR], 2009). It complements existing laws by imposing supplemental rules to govern the behaviour of firms. They are mainly involved with other countries that are well developed as well as internal trade. According to Hill, due to the establishment of NAFTA, textile workers in Canada and the U.S., which employ low-cost and low-skilled labor, lost their jobs as the two countries moved production to Mexico (Hill, 2009). Mexico is mainly involved with other developed countries in terms of exports and the imports as the main economic ... was free to ... countries. World Bank. The governments are better-placed in order to prevent themselves from the act of lobbying by the narrow interest groups by focusing on the trade-offs that are made for the benefits of everyone in the economy. The United States and Canada would thus benefit from Mexico’s boosted economy, allowing the two countries to further export products and services to Mexico. the pros of regional integration. In this paper, I will select a region, chose a trading bloc within that region, and write an article in favor of regional integration and another against it. In our childhood we all have read that story where it is easier to break one piece of wood but when there are multiple pieces of woods attached than it is very difficult to break them. This includes: 1) enlargement of existing regional integration, including the FTAs between the EU and the Central and Eastern European countries (CEECs), the FTA to be set up between the EU and the Mediterranean countries, and the creation of a Free Trade Area of the Americas (FTAA); 2) linkage between regional integration There are many advantages in regional integration but there are also disadvantages to it. http://www.doingbusiness.org/data/exploreeconomies/malaysia/. Share Tweet LinkedIn Like. Retrieved February 14, 2009, from http://www.investorwords.com/5670/NAFTA.htmlOECD (n.d.). Employment opportunities. The Pros and Cons of Regional Integration regional economic integration economic integration North American Free Trade Agreement (NAFTA) Financial Markets Paper & Trading Bloc Recommendation Riordan: Financial organizations and regional trading blocs International Investments and Capital Sources Globalization and Localization By joining the agreement, Mexico was able to boost its economy and for the first time was able to elect a president that did not belong to the revolutionary party (USTR). You must cite our web site as your source. Other than increase market share, profitability and business stability indirect exporting method also facilitate the company that originated in UK to establish its operation in many foreign. 2. trade gains- regional integration creates new markets for the involved countries; increase in economics of scale- regional integration leads to increase in economics in countries involved produces more for the increased and ready available market Higher Costs If participation in a regional economic integration agreement leads to decreased trade and investment with less-expensive markets outside the region while encouraging trade with more-expensive markets inside the region, it can result in higher costs to consumers. The reduction of costs for producing products is the effect due to the lowering of trade barriers, and regional integration also allows the three countries a larger market share and the opportunity to increase competition. Regional integration allows disadvantaged countries, such as Mexico, to realize economies of scale, compete on a broader platform, and increase overall economic efficiency (OECD, n.d.). Vertical integration requires a significant capital investment by an organization if this effort has a chance to be successful. Retrieved 2012-11-25 “East Asian Tigers – ... 2011) The North American Free Trade Agreement (NAFTA) came into force on January ... NAFTA Definition. Firstly, a WTO backed resolution for a particular agreement can only be passed if there is full agreement between all members. Advantages and Disadvantages of Regional Integration in Business 1200 Words | 5 Pages. In order to sign the agreement it needs the approval of the legislators of the partner countries. Employment opportunities. pros and cons of different regional integration options Analytical Report Version as of December 2011 Please don’t cite without permission Contact person: Veronika Movchan, movchan@ier.kiev.ua The report was prepared with the financial support of the World Bank (Contract № 7155026/2), the International Renaissance Foundation The most important aspect of regional integration is the ability to help strengthen economic as well as social and cultural ties between countries, and the biggest advantage is the ability to establish and maintain free open trade. Some benefits include specialization, reduced prices, increased competition, and economies of scale. Article Two (Against regional integration)Regional integration for North America also has its disadvantages, which leads me to write this article against such an agreement. Free trade area.This is the most basic form of economic cooperation. Yet many countries set up restrictions to restrict the movement of goods to protect of their national interest. "Wilbur Ross Says He’s ‘Open to Resuming’ Talks on Mega-trade Deal with Europe," Accessed Jan. 8, 2020.CNN Business. New forward or backward vertical integration efforts may require building new facilities, hiring new staff, and understanding new processes that are unfamiliar to the corporation. A preferential trade agreement is a trading alliance that gives preferential access to certain products from the participating countries. Adam Smith’s work is guided by the idea that economic agents in the search for their own interests will eventually achieve better results for not only themselves but also society. Measures such as imported quotas and tariffs are often imposed. Studies indicate that regional economic integration significantly contributes to the relatively high growth rates in the less-developed countries. Regional economic cooperation and integration do have important security dimensions and implications. There are four main types of regional economic integration. If there is not enough money i… As a result, the regional economic integration treaty can lead to a net loss in foreign investment. Then the business must continue to keep these assets running in specific ways because efficiency must be maintained for the profit margin to remain consistent. Even if the integration occurs through partnerships, an investment into specific patents, processes, or proprietary data is often required as part of the deal. A concise summary (3000 words) of the main pros and cons of EMU and the Euro - covering economics, social issues, national soviergnty, etc. NAFTA at 10: An Economic and Foreign Policy Success. Regional economic integration has enabled countries to focus on issues that are relevant to their stage of development as well as encourage trade between neighbors. International trade gives companies an opportunity to open new markets in global and provide a better goods and services choice for people (Wild el al, 2008). Member countries remove all barriers to trade between themselves but are free to independently determine trade policies with nonmember nations. An example is the North American Free Trade Agreement (NAFTA). Before stating my opinions of why I would be for regional integration and then, why I would be against it, I will define the term for clarification and understanding. The measures of economic development in Mexico include per capita GDP of about 9,000 dollars. Mexican wages have continued to grow since the 1994 peso crisis, while studies have shown that Mexican industries that export or that are in regions with a higher concentration of foreign investment and trade also have higher wages (USTR). Another critical force of leading to globalization is the reduction of cross-border barriers. ... (WTO) acceptance are more stringent than those required by a Regional Free Trade Agreement (RTA). By removing restrictions on labor movement, economic integration can help expand job opportunities. Cola Delight decide on indirect methods of market entry because it also generally want less marketing investment, but could lose considerable control over the marketing process. 1. In order for one to gain a better understanding of the issue, it is necessary to examine both the advantages and disadvantages of regional integration. "Free Trade Agreements Australia," Accessed Jan. 8, 2020.Office of the United States Trade Representative. Regional integration is no different and has many benefits and risks. NAFTA created more jobs within the United States, as employment in the U.S. grew from 120.3 million in 1993 to 135.1 million in 2001, an increase of almost 2,000,000 jobs per year (Griswold, 2002). The economic regionalism has also the self-protecting response with security overtones to economic globalization. Other cons of horizontal integration include: Stunting economic growth of the new enterprise. For the aforementioned region, the demand for products from the U.S. and Canada will increase and in turn, make up for production losses in those countries. Mexican citizens have also felt that NAFTA was not a satisfactory trade agreement because they believed the U.S. would overtake Mexico with companies that would not contribute to its economy (OECD). NATO set the stage for the success of the EU by proving people can work together for the greater good. Again, environmentalists express their concerns that pollution would be promoted due to weak environmental standards under NAFTA. The idea of the ASEAN-China Free Trade Agreement ... All Papers Are For Research And Reference Purposes Only. Here you can order a professional work. Regional integration would also produce a loss of national sovereignty or a loss of identity as countries hand over some of their monetary, fiscal, and trade decision-making powers, thus making them rely on the trading bloc (Hill). Regional Integration Agreements. ... Economic Community (EEC). For example, if there are countries that protected their agriculture, other countries will have to pay higher for food, causing tensions on wages of all sectors. In helping to clear things up, the WTO system covers a wide range of sectors. ... integration. Such a move is a clear benefit to Mexico because of the creation of jobs and boosting of its economy. Industries have chosen self-regulation in response to both the absence of government regulation and the threat of excessive government regulation. International Business: Competing in the Global Marketplace (7th ed.). Adult literacy is about 94% for the males whereas 91% for the females. ADVERTISEMENTS: The healthy effects of such a regional economic integration are presumed to be as follows: 1. (Find a price that suits your requirements), * Save 10% on First Order, discount promo code "096K2". This can be considered unfair to certain countries as they still have the tariffs and some just have very less. The European Union is an economic and political union of 27 member nations which are located in Europe. Trade Bloc: Definition, Types, Pros, and Cons. Here you can order a professional work. Mexico experienced an increase in its economy, the election of a non-revolutionary party president, and the U.S. witnessed a drop in unemployment, as well as a growth in jobs. The main advantages of regional integration is the availability of newer, cheaper, faster and more. Trade Representative (2009). CNBC. Updated December 2, 2020. 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