国际商务的环境InternationalBusinessEnvironmentRegionalEconomicDevelopmentCh.8
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– Goods – Services – Factors of production
Levels of Economic Integration
1. Free Trade Area (FTA):
1. removes tariffs among members 2. members retain own trade policies toward others
➢ Major members ignoring monetary union rules to retain control over their fiscal and monetary policies
Enlargement of the EU
➢More member disparity, more difficult governance
3. May need fiscal transfers from prosperous to depressed regions
3.Economic and political issues may conflict
Early Experience of the Euro (€)
➢ Volatile trading history
➢ Prices comparable across the continent; increased competition
➢ Rationalization of production across Europe to reduce cost
➢ Pan-European capital market ➢ Increase range of investment options available
Regional Economic Integration
Regional Economic Integration
➢ Levels of economic integration among nations ➢ Economic and political arguments for/against ➢ History/scope, scope and future prospects for:
– EU – NAFTA – MERCOSUR, and – APEC
➢ Implications l Economic Integration
➢ Agreements among geographically proximate countries to reduce/remove tariff and non-tariff barriers to free flow of:
Remove all frontier controls Principle of mutual recognition to product standards Open public procurement to non-national suppliers Lift barriers of competition to banks and insurance Remove restrictions on foreign exchange transactions Abolish restriction on cabotage (trucking)
The Americas
Elsewhere
➢ Association of Southeast Asian Nations (ASEAN) – Brunei, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam
1.Free trade 2.Fee FDI
2.Political Reasons
1.Linkages of economies create interdependencies that reduce the potential for violent conflict
2.Grouping gives countries more political clout world-wide
1. full integration of member economies (common policy)
5. Political Union: EU+
– political and economic integration
Reasons for Regional Integration
1.Economic enhancement of the member states
➢ 1994 Maastricht treaty: European Union ➢ 2019 4th enlargement: Austria, Finland, Sweden ➢ 2019 5th enlargement: Poland, Hungary, Czech Republic,
Lithuania, Estonia, Latvia, Slovenia, Cyprus, Malta, Slovakia
2.EU is not an optimal currency area
1. Few similarities in structure of economic activity (e.g., Finland vs Portugal)
2. Interest rates too high in depressed regions or too low for economically booming regions
➢ 1973 1st enlargement: Britain, Ireland, Denmark
European Union
➢ 1981 2nd enlargement: Greece ➢ 1983 3rd enlargement: Portugal, Spain ➢ 1992 single European act
2. Customs Union (CU): FTA+
1. common trade policy toward others
3. Common Market (CM): CU+
1. eliminates intra-market factor of production movements
4. Economic Union (EU): CM+
– 2019 -- €1 = US$1.17 – 10/2000 -- €1 = US$0.83 – 10/2019 -- €1 = US$1.24
➢ EU enlargement will complicate Euro adoption;
new members with weaker economies
The Euro (€)
➢ Maastricht treaty:
– European common currency adopted 1/1/99 – Common foreign and defense policy – Common citizenship – EU parliament with “teeth”
➢ € now used by 12 countries (since 1/1/02)
– Sweden, Denmark, Britain opted out – 10 new countries have to qualify
Benefits of the Euro (€)
➢ Lower transaction costs for individuals / business
3.Impediments
– Painful adjustments in certain segments of economy – Threat to national sovereignty
European Union
➢ 25 member countries; 450mm people; GDP > US
➢Norway opted out of the EU (1994) ➢Membership applications pending: Turkey,
Bulgaria, Rumania, Croatia
– Turkish application controversial (economic development, religion, labor movement problems)
➢ 1951 6 members of coal and steel community
– France, Germany (W.), Italy, Belgium, Netherlands, Luxembourg
➢ 1957 Treaty of Rome: European Community
– Common market – Elimination of internal trade barriers – Common external tariff – Free movement of factors of production
➢ General (effective 1/1/94)
– Tariffs of all sectors reduced by 99% over 10 yrs – FDI unrestricted (x-oil and railways in Mexico,
Culture in Canada, airlines-communications US) – No free movement of labor (x-white collar
– USA is Mexico’s largest trading partner – Mexico, USA’s third largest trading partner
➢ Trade opening process through tariff elimination
NAFTA - Key provisions
to both individuals and institutions
Costs of the Euro (€)
1.ECB has monetary policy control not nations
1. Sets interest rates, monetary policy (Frankfurt, Ger.) 2. Is independent; instructs national central banks
➢ The Andean Pact: Bolivia, Chile, Ecuador, Colombia, Peru
➢ MERCOSUR (FTA): Brazil, Argentina, Paraguay, Uruguay
➢ Central American Free Trade Agreement (CAFTA): Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua
➢ Asia Pacific Economic Cooperation – USA, Japan, China + 15 Pacific nations
NAFTA
➢ USA, Canada, Mexico (FTA-1988)
– USA-Canada is world’s largest trading relationship
➢Other non-European countries will seek membership
➢US and Asian countries fear that EU will become protectionist (“fortress Europe”)
The Americas
➢ North American Free Trade Agreement (NAFTA): USA, Mexico, Canada
Levels of Economic Integration
1. Free Trade Area (FTA):
1. removes tariffs among members 2. members retain own trade policies toward others
➢ Major members ignoring monetary union rules to retain control over their fiscal and monetary policies
Enlargement of the EU
➢More member disparity, more difficult governance
3. May need fiscal transfers from prosperous to depressed regions
3.Economic and political issues may conflict
Early Experience of the Euro (€)
➢ Volatile trading history
➢ Prices comparable across the continent; increased competition
➢ Rationalization of production across Europe to reduce cost
➢ Pan-European capital market ➢ Increase range of investment options available
Regional Economic Integration
Regional Economic Integration
➢ Levels of economic integration among nations ➢ Economic and political arguments for/against ➢ History/scope, scope and future prospects for:
– EU – NAFTA – MERCOSUR, and – APEC
➢ Implications l Economic Integration
➢ Agreements among geographically proximate countries to reduce/remove tariff and non-tariff barriers to free flow of:
Remove all frontier controls Principle of mutual recognition to product standards Open public procurement to non-national suppliers Lift barriers of competition to banks and insurance Remove restrictions on foreign exchange transactions Abolish restriction on cabotage (trucking)
The Americas
Elsewhere
➢ Association of Southeast Asian Nations (ASEAN) – Brunei, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam
1.Free trade 2.Fee FDI
2.Political Reasons
1.Linkages of economies create interdependencies that reduce the potential for violent conflict
2.Grouping gives countries more political clout world-wide
1. full integration of member economies (common policy)
5. Political Union: EU+
– political and economic integration
Reasons for Regional Integration
1.Economic enhancement of the member states
➢ 1994 Maastricht treaty: European Union ➢ 2019 4th enlargement: Austria, Finland, Sweden ➢ 2019 5th enlargement: Poland, Hungary, Czech Republic,
Lithuania, Estonia, Latvia, Slovenia, Cyprus, Malta, Slovakia
2.EU is not an optimal currency area
1. Few similarities in structure of economic activity (e.g., Finland vs Portugal)
2. Interest rates too high in depressed regions or too low for economically booming regions
➢ 1973 1st enlargement: Britain, Ireland, Denmark
European Union
➢ 1981 2nd enlargement: Greece ➢ 1983 3rd enlargement: Portugal, Spain ➢ 1992 single European act
2. Customs Union (CU): FTA+
1. common trade policy toward others
3. Common Market (CM): CU+
1. eliminates intra-market factor of production movements
4. Economic Union (EU): CM+
– 2019 -- €1 = US$1.17 – 10/2000 -- €1 = US$0.83 – 10/2019 -- €1 = US$1.24
➢ EU enlargement will complicate Euro adoption;
new members with weaker economies
The Euro (€)
➢ Maastricht treaty:
– European common currency adopted 1/1/99 – Common foreign and defense policy – Common citizenship – EU parliament with “teeth”
➢ € now used by 12 countries (since 1/1/02)
– Sweden, Denmark, Britain opted out – 10 new countries have to qualify
Benefits of the Euro (€)
➢ Lower transaction costs for individuals / business
3.Impediments
– Painful adjustments in certain segments of economy – Threat to national sovereignty
European Union
➢ 25 member countries; 450mm people; GDP > US
➢Norway opted out of the EU (1994) ➢Membership applications pending: Turkey,
Bulgaria, Rumania, Croatia
– Turkish application controversial (economic development, religion, labor movement problems)
➢ 1951 6 members of coal and steel community
– France, Germany (W.), Italy, Belgium, Netherlands, Luxembourg
➢ 1957 Treaty of Rome: European Community
– Common market – Elimination of internal trade barriers – Common external tariff – Free movement of factors of production
➢ General (effective 1/1/94)
– Tariffs of all sectors reduced by 99% over 10 yrs – FDI unrestricted (x-oil and railways in Mexico,
Culture in Canada, airlines-communications US) – No free movement of labor (x-white collar
– USA is Mexico’s largest trading partner – Mexico, USA’s third largest trading partner
➢ Trade opening process through tariff elimination
NAFTA - Key provisions
to both individuals and institutions
Costs of the Euro (€)
1.ECB has monetary policy control not nations
1. Sets interest rates, monetary policy (Frankfurt, Ger.) 2. Is independent; instructs national central banks
➢ The Andean Pact: Bolivia, Chile, Ecuador, Colombia, Peru
➢ MERCOSUR (FTA): Brazil, Argentina, Paraguay, Uruguay
➢ Central American Free Trade Agreement (CAFTA): Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua
➢ Asia Pacific Economic Cooperation – USA, Japan, China + 15 Pacific nations
NAFTA
➢ USA, Canada, Mexico (FTA-1988)
– USA-Canada is world’s largest trading relationship
➢Other non-European countries will seek membership
➢US and Asian countries fear that EU will become protectionist (“fortress Europe”)
The Americas
➢ North American Free Trade Agreement (NAFTA): USA, Mexico, Canada