Download chapter_8_lecture

Global
Business
Today
3rd Canadian Edition
Charles W. Hill - Thomas McKaig
©2011 McGraw-Hill Ryerson
All rights reserved
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 1
Regional
Economic
Integration
Chapter 8
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 2
Regional Economic Integration
Definition:
Agreements among countries in a
geographic region to reduce, and
ultimately remove, tariff and nontariff
barriers to the free flow of goods,
services, and factors of production
between each other.
Example:
NAFTA (North American Free Trade Agreement)
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 3
BRIC Countries
• BRIC (also sometimes called the golden
BRIC or The Big Four) refers to
• Brazil
• Russia
• India
• China
• They are the
four largest economies
outside of the OECD
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 4
BRIC Countries
• Unlike the countries that make up the
•
•
G7, there are large differences between
BRIC countries.
Two are democracies,
while two have
authoritarian regimes.
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 5
Levels of Economic Integration
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 6
The Case for Regional Integration
• Economic Case for Integration
•
Regional economic integration can be
seen as an attempt to achieve additional
gains from the free flow of trade and
investment between countries
Political Case for Integration
Linking neighbouring economies and
making them increasingly dependent on
each other creates incentives for political
cooperation between neighbouring states.
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 7
Impediments to Integration
Despite the strong economic and political
arguments for integration, it has never been
easy to achieve or sustain for two main
reasons.
• First, although economic integration benefits
the majority, it has its costs.
• While a nation as a whole may benefit significantly
•
from a regional free trade agreement, certain
groups may lose.
Moving to a free trade regime involves some
painful adjustments.
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 8
Impediments to Integration
• A second impediment to integration arises
from concerns over national sovereignty.
• For example, Mexico’s concerns about
maintaining control of its oil interests resulted in
an agreement with Canada and the United States
to exempt the Mexican oil industry from any
liberalization of foreign investment regulations
achieved under NAFTA.
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 9
The Case Against Regional Integration
In recent years, some economists have
expressed concern that the benefits
of regional integration have been
oversold, while the costs have often
been ignored
The benefits of regional integration are
determined by the extent of trade creation, as
opposed to trade diversion
•Trade creation occurs when high-cost domestic producers are
replaced by low-cost producers within the free trade area.
•Trade diversion occurs when lower-cost external suppliers are
replaced by higher cost suppliers within the free trade area.
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 10
European Economic Integration
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 11
Political Structure of the
European Union
The five main institutions in this structure
are:
1.
2.
3.
4.
5.
The European Council
The Council of Ministers
The European Commission
The European Parliament
The Court of Justice
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 12
European Union – who are the members?
The European Union was initially composed of 15
member states representing 374 million people
(year of entry in brackets):
Belgium (1950),
Germany (1950),
France (1950),
Italy (1950),
Luxembourg (1950),
the Netherlands (1950),
Denmark (1973),
Ireland (1973),
United Kingdom (1973),
Greece (1981),
Spain (1986),
Portugal (1986),
Austria (1995),
Finland (1995),
and Sweden (1995).
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 13
European Union – who are the members?
The ten nations that joined on May 1, 2004, were the
Greek sector of Cyprus,
the Czech Republic,
Estonia,
Hungary,
Latvia,
Lithuania,
Malta,
Poland,
Slovakia,
And Slovenia.
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 14
European Union – the 2004 members
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 15
European Union – the 2007 members
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 16
European Union – who are the members?
Croatia and Turkey both began negotiations with the EU
in 2005 and the European Commission has made it
know that Croatia’s date for accession could be as early
as 2011.
However, Turkey has had a longer path to follow and its
accession might be as late 2025.
Although Macedonia was made an official EU candidate
in 2005, no date has been set to begin membership talks
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 17
The Euro (€)
By January 1, 1999, the European Union adopted
the Euro as a common currency in the Union.
Benefits
• Individuals and businesses will
Costs
• National authorities have lost
realize significant savings from
control over monetary policy
having only one currency
• The Maastricht Treaty called for
• A common currency makes it easy establishment of an independent
to compare prices across Europe
European Central Bank
• European producers will be forced • ECB has the responsibility to set
to look for ways to reduce their
interest rates and determine
production costs to maintain
monetary policies for the euro
profits
zone
• Supports the development of the
pan-European capital market
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 18
Canada and the European Union
http://www.international.gc.ca/commerce/visit-visite/eu-canada-ue-6.aspx?lang=eng
From the website of the Dept. of Foreign Affairs re: Canada-EU relations
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 19
Regional Integration in the Americas
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 20
NAFTA
Click on the screen capture to go direct to the website on the
Dept. of Foreign Affairs re: NAFTA
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 21
NAFTA
The Case FOR NAFTA
Proponents argue that NAFTA should be viewed as an
opportunity to create an enlarged and more efficient
productive base for the entire region.
One likely effect of NAFTA will be that many U.S. and
Canadian firms will move some production to Mexico to
take advantage of lower labour costs
(average hourly labour costs in Mexico are about one-tenth
those found in Canada and the United States).
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 22
NAFTA
The Case AGAINST NAFTA
Those who opposed NAFTA claimed that ratification
would be followed by a mass exodus of jobs from the
United States and Canada into Mexico as employers
sought to profit from Mexico’s lower wages and less
strict environmental and labour laws.
The period since NAFTA took effect has had little
impact the on trends already in place.
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 23
Mercosur
Originated in 1988 as a
free trade pact between
Brazil and Argentina
The pact was expanded
in March 1990 to
include Paraguay and
Uruguay.
The four countries
of MERCOSUR have a
combined population of
200 million.
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 24
Caricom
A customs union was to have been created in 1991
between the English-speaking Caribbean countries
under the auspices of the Caribbean Community.
Referred to as CARICOM, it was established in
1973. However, it has repeatedly failed to progress
toward economic integration.
In early 2006, six CARICOM members
established the Caribbean Single Market and
Economy (CSME). Modelled on the EU’s
single market, the goal of CSME is to lower
trade barriers
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 25
Asia Pacific Economic Cooperation
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 26
Asia Pacific Economic Cooperation
http://www.apec.org/
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 27
ASEAN Association of
South East Asian Nations
• ASEAN members are countries that do NOT
•
•
•
include the big economies of
China
Japan
South Korea
http://www.aseansec.org/
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 28
Regional Trade Blocs in Africa
Global Business Today 3rd Edition ©2011 McGraw Hill Ryerson All rights reserved
PowerPoints by Prof. W. Tim G. Richardson, Seneca College and University of Toronto
Chpt 8 Slide number 29