I need to analyze the role of regional integration in promoting global business. Specifically I need to discuss the advantages and disadvantages of regional integration with CAFTA and the US. I also have to compare and contrast the economic development stages of Guatemela and the ramifications of any economic development. Would appreciate any help you can give - I am at a loss of where to start© BrainMass Inc. brainmass.com October 9, 2019, 5:49 pm ad1c9bdddf
I need to analyze the role of regional integration in promoting global business. Specifically I need to discuss the advantages and disadvantages of regional integration with CAFTA and the US. I also have to compare and contrast the economic development stages of Guatemela and the ramifications of any economic development. Would appreciate any help you can give - I am at a loss of where to start
Investment effects of regional integration agreements and how such arrangements may affect inward and outward foreign direct investment flows in the integrating region. After setting up a conceptual framework we need to focus on different kinds of regional integration: North-North integration (Canada joining CUSFTA), North-South integration (Mexico's accession to NAFTA), and South-South integration (MERCOSUR). The main conclusion is that the responses to an integration agreement largely depend on the environmental change brought about by the agreement and the locational advantages of the participating countries and industries. Moreover, the outcomes suggest that the most positive impact on FDI has occurred when regional integration agreements have coincided with domestic liberalization and macroeconomic stabilization in the member countries.
Regional integration is gaining momentum across the globe. In addition to the well-known integration efforts in Europe, policymakers in Latin America and the Caribbean, Asia, Africa, and the Middle East are considering policies to foster integration and regional coordination. Of course, the scope and rationale for these initiatives differ widely. For smaller countries, such as those in Central America, regional integration is a strategy to maximize economies of scale so that they can participate successfully in a more globalized economy.
Efforts to foster Central American integration started in the early 1960s. The region appears to be a natural candidate for integration because the countries share many of the same characteristics and enjoy a common history and language. At that time, the objective was to create a common market similar to the European model. But this process was interrupted by a period of armed conflict in parts of Central America.
While the implementation of a clear reform agenda is often hampered by fragmented and sometimes highly polarized political landscapes, minority governments, entrenched interest groups, short election cycles, and governance problems, there is a growing consensus in favor of more integration and regional cooperation to ensure that the region takes full advantage of its potential. The implementation of the free trade agreement of Central American countries (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua), the Dominican Republic, and the United States-referred to as CAFTA or CAFTA-DR-is expected to provide an additional boost to Central America's global and regional integration and to serve as an anchor for further economic and institutional development. Central America's integration has been advancing on two fronts. Economic ties with the United States have strengthened over the past decade, especially in trade, with exports to the United States now accounting, on average, for 80 percent of Central America's total exports and 15 percent of GDP (see Chart 2). But strong and growing linkages are not limited to trade. For example, remittances of the large Central American community living in the United States are sizable and have increased rapidly over the past couple of years, amounting to 10-15 percent of GDP in 2004.
At the same time, integration among the Central American economies has also advanced. While intraregional trade continues to be limited-despite the elimination of most taxes on such trade and the establishment of a common external tariff-the region's financial systems have become highly integrated. Local financial institutions that originally focused on the home market are increasingly providing services throughout Central America, But a number of regional institutions involved in information sharing and the harmonization of regulations are now taking the first steps toward coordinating policies. For example, the Central American Monetary Council provides a forum for the region's central bank presidents to exchange information on monetary policy developments and risks to financial systems. The Central American Council of Financial Sector Superintendents has become a forum for financial sector superintendents searching for ways to reduce the risks associated with cross-border financial transactions, including the sharing of information and the adoption of common financial frameworks The CAFTA-DR free trade agreement is modeled after similar U.S. free trade agreements with Chile and Singapore, and the United States is currently negotiating similar bilateral agreements with Colombia, Ecuador, Panama, and Peru. Although the region already has preferential access to the U.S. market under the Caribbean Basin Initiative, CAFTA-DR will make this access permanent, providing greater predictability for both domestic and foreign investors. In addition, CAFTA-DR provides enhanced market access to the United States, including reduced local content requirements. And it goes substantially beyond trade to include investment flows, financial and government services, and provisions that will strengthen the institutional framework in the region, including property rights.
Trade agreements similar to CAFTA-DR are relatively recent and, therefore, empirical evidence to analyze the impact of such agreements is scant. Nevertheless, Mexico's experience under the North American Free Trade Agreement (NAFTA) suggests that CAFTA-DR will provide a boost to trade and foreign direct investment flows, which, in turn, should spur economic growth
The agreement will solidify regional economic ...
analyze the role of regional integration in promoting global business