Regional Economic Integration Flashcards
Why do nations pursue economic integration?
Expand market size
Enhance productivity and economies of scale
Attract investment from outside the bloc
Acquire stronger defensive and political posture
Country level drawbacks of regional integration
Trade creation- as barriers fall, trade is generated inside the bloc
Trade diversion- member countries discontinue some trade with nonmember countries
Aggregate effect- reduce global free trade
Loss of national identity
Sacrifice of autonomy
Firm-level drawbacks of regional integration
Transfer of power to advantages firms
Failure of small or weak firms
Corporate restructuring and job loss
What factors help regional integration succeed?
Economic similarity
Political similarity
Similarity of culture and language
Geographic proximity
Implications of regional economic integration for the firm?
Internationalisation by firms inside the economic bloc
Rationalisation of operations
Mergers and acquisitions
Regional products and marketing strategy
Internationalisation by firms from outside the bloc
What is regional economic integration?
The growing economic interdependence that results when nations within a geographic region form an alliance aimed at reducing barriers to trade and investment
What do cooperating nations obtain?
Increased product choices, productivity, living standards
Lower prices
More efficient resource use
What is an economic bloc?
A geographic area consisting of two or more counties that agree to pursue economic integration
By reducing tariffs and other barriers to the cross-border flow of products, services, capital, and in more advanced cases, labour
Economic bloc examples
ASEAN
APEC
