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Week 9 Flashcards

1
Q

What is regional economic integration

A

When countries come together to create free trade areas so that they can have trade access to each others market

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2
Q

What are the regional trade blocks

A

Formed to reduce barriers of trade and promote economic integration in member countries

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3
Q

What are the levels of economic integration

A
  1. Free Trade area
  2. Customs unions
  3. Common market
  4. Economic Union
  5. Political union
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4
Q

What is the free trade area

A

Countries that freely trade with each other

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5
Q

What is a customs union

A

Countries form common policies and tariffs among most or all of their imports and exports and transiting goods.

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6
Q

What are common market

A

you have free trade, common external trade policy and the labour, investment can be moved around in that area

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7
Q

What is the economic union

A

Freetrade, common external trade, investment, labour and capital is moving, there’s one currency

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8
Q

What is the political union

A

Joining countries to become under one government

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9
Q

What is economic case for integration?

A

Stimulates economic growth, increases FDI and world production, countries specializes in those goods and services they efficiently product

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10
Q

What are political case for integration

A

Reduces violent confrontation, countries have more economic clout to enhance trade with other countries or trading blocks

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11
Q

What are the problems to integration?

A
  1. Integration is hard to achieve and sustain, countries lose freedom and sovereignty
  2. Not all nations will benefit
  3. Not all nations will be efficient
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12
Q

Why is it not good to have a regional trade block?

A

The benefits of integration will benefit the world only if the amount of trade creates exceeds the amount of trade it diverts

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13
Q

What is trade creation

A

When a trade agreement stimulates additional trade between member countries, leading to improved economic efficiency, increased market access and enhanced consumer choices

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14
Q

Trade diversion

A

It is a draw back and is when trade patterns leads to less efficient allocation of resources resulting in higher costs for consumers, less quality products or loss of economic efficiency.

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15
Q

What is the regional economic integration in Europe

A

This is when 27 countries in Europe agreed on economic cooperation and integration within the European continent resulting to the European Union

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16
Q

What is the European Union

A

Seen as the emerging power with 27 members

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17
Q

What is the European Free Trade Association

A
  1. Oldest free trade association that didn’t take part of the EU
  2. Has only four members
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18
Q

Who is apart of the european free trade association?

A

Linkenstine, Iceland, Norway, Switzerland

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19
Q

Who was the 28th member that left the EU

20
Q

What was the evolution of the EU

A

Was created because of the two world wars on Western Europe and the desire of lasting peace and the desire by the EU nations to hold their own on the worlds political economic stage

21
Q

When did the EU start?

A

After the two world wars in Western Europe

22
Q

Why was the EU formed

A

To maintain peace and because European nations want to to hold the worlds political and economic stage

23
Q

Who was the forerunner of the EU

A

European Coal and Steel community

24
Q

What was the goal of the European coal and steel community

A

To remove barriers of trade in coal, iron, steel and scrap metal in 1951

25
What is the European Economic Community?
Was formed in 1957 at the treaty of Rome with the goal of becoming a common market
26
What is the Single European Act?
This provided the impetus for the restructuring of substantial sections of European industry for faster economic growth than
27
When was the Single European Act formed?
1987
28
Who adopted the Single European Act
EU
29
What are the qualifications for EU memberships?
1. Privatize state assets 2. Deregulate markets 3. Restructure industries 4. Tame inflation 5. Enshrine complex EU laws into their own systems 6. Establish stable democratic governments 7. Respect Human Rights
30
What is the Maastricht treaty
Committed the EU to adopt a single currency the euro
31
What do the european zone have to keep in mind?
Must have economic stability and be comparable with other countries, have financial balance to remain in the euro zone
32
Who have opt out in the euro zone?
Denmark and Sweden
33
What treaty was adopted in 2009
Lisbon Treaty
34
What is the Lisbon treaty
1. Watered down version of EU treaty 2. This is an emergency treaty
35
What were the results of adopting the euro
The EU has created the second largest currency zone in the world after the US dollar
36
What happened to the euro zone in the 2008 financial crisis?
They weer put into trouble and the Euro was devalued and was stuck and did not allow them to develop
37
What are the benefits of euro
1. Savings from using only one currency 2. Easy to compare prices and resulting in lower prices 3. Forces the efficiency and slashing costs 4. Creates a liquid pan-europa capital market 5. Increases the range of investments for individuals and institutions
38
What are the costs of the euro
1. Countries lose monetary policy control 2. European Central Bank controls policy of the euro zone 3. EU is not an optimal currency area 4. country economies are different 5. Euro puts the economic cart before the political horse 6. Strong euro makes it harder for euro zone exporters to sell their goods
39
What is NAFTA
North American Free Trade Agreement between US, Canada, Mexico to establish free trade, reduce trade barriers and promote economic integration in North America
40
When was NAFTA enforced
January 1994
41
What were the results of NAFTA
Helped remove barriers on cross border flow of services and restrictions on FDI except in certain sectors
42
What are the pros of NAFTA
1. Increased the productive regional base 2. Labour incentive industries moved to Mexico 3. Mexico gets investment and employment 4. Increased Mexican income to buy US/Canadan goods 5. Increased jobs bc demand of goods also increased 6. Consumers get lower prices
43
What are the cons of NAFTA
1. US lost jobs to mexico 2. Mexican firms had to compete against efficient US/Canadian firms 3. Environmental degradation 4. Loss of sovereignty
44
What are the opportunities of NAFTA for business
1. Created single markets 2. Protected markets 3. Lower costs for businesses
45
What are the threats of NAFTA for businesses
1. Made economies of scale difficult because of the culture and competitive practices differences 2. More price competition 3. Outside firms shut down of the market 4. EU intervention in mergers and acquisitions

Bus 346 (4 decks)

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