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Description of Regional Integration

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Prepare a response in which you analyze the role of regional integration in promoting global business.

Address the following:
a) Trade creation
b) Economies of scale gains
c) Increased bargaining power
d) Increased market attractiveness
e) Cooperation in public goods

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Interesting topic! Let's look closer at the five sections that you are asked to include in your paper, which you can then draw on for your final copy.

Regional integration is a process in which states enter into a regional organization in order to increase regional cooperation and diffuse regional tensions. Past efforts at regional integration have often focused on removing barriers to free trade in the region, increasing the free movement of people, labour, goods, and capital across national borders, reducing the possibility of regional armed conflict (for example, through Confidence and Security-Building Measures), and adopting cohesive regional stances on policy issues, such as the environment. Such an organization can be based either on supranational or intergovernmental decision-making institutional order. Examples of regional integration include NAFTA, ASEAN and Mercosur. Also, the European Union is an attempt at regional integration, where some policy areas has moved beyond an intergovernmental approach to decision making at a federalist or supra-state level (http://en.wikipedia.org/wiki/Regional_integration).

Regional integration is the formation of closer economic linkages among countries that are geographically near each other, especially by forming preferential trade agreements (http://www-personal.umich.edu/~alandear/glossary/r.html), for the safeguarding or promotion of the participants. Regional integration is often obtained through regional trade agreements (RTA) which promote global business through such things as trade creation, economies of scale gains, increased, bargaining power, increased market attractiveness, and cooperation in public goods.

1. Trade Creation

For example, NAFTA's goals include the following advantages, including trade creation through eliminating tariffs, etc.

· Fostering increased trade and investment among the three members by...
· Providing for the elimination of nearly all tariffs on most traded goods and services by 2003
· Provisions regulating investment, services and intellectual property among members
· Side agreements covering labor and the environment among member nations
· Total 1997 GDP: $8.8 trillion (http://www.eia.doe.gov/emeu/cabs/archives/theamericas/chapter6a.html)..

And, regional integration results in economic integration, namely the proposal to establish a customs union, initially between Guatemala and El Salvador (in 1996), subsequently incorporating Honduras and Nicaragua (in 2000) and with Costa Rica agreeing to join in 2002. In March 2002, the Central American Presidents approved an ambitious Plan of Action for Central American Economic Integration, including the progressive ...

Solution Summary

This solution provides help in analyzing the role of regional integration in promoting global business including several dimensions e.g. trade creation, economies of scale gains, increased bargaining power, increased market attractiveness, and cooperation in public goods. Three supporting articles on regional integration are provided for further research and expansion.