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Regional Economic Integration Chapter 8

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Presentation on theme: "Regional Economic Integration Chapter 8"— Presentation transcript:

1 Regional Economic Integration Chapter 8
© The McGraw Hill Companies, Inc., 2000

2 Levels of Economic Integration
Level of Integration Political Union Economic Union NAFTA Common Market Customs Union Free Trade Area Figure 8.1 in text EU 1992 © The McGraw Hill Companies, Inc., 2000 8-1

3 Economic Case for Regional Integration
Stimulates economic growth in countries Countries specialize in those goods and services efficiently produced. Additional gains from free trade beyond international agreements such as GATT and WTO. 8-2 © The McGraw Hill Companies, Inc., 2000

4 Political Case for Economic Integration
Economic interdependence creates incentives for political cooperation and reduces potential for violent confrontation. Together, the countries have the economic clout to enhance trade with other countries or trading blocs. 8-3 © The McGraw Hill Companies, Inc., 2000

5 Impediments to Regional Integration
Groups within countries may be hurt. Potential loss of sovereignty and control over domestic issues. Debate: Integration is trade creation? Integration is trade diversion? 8-4 © The McGraw Hill Companies, Inc., 2000

6 Political World Map 8-5 © The McGraw Hill Companies, Inc., 2000

7 Regional Economic Integration
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 among each other. 8-6 © The McGraw Hill Companies, Inc., 2000

8 Growth of Regional Arrangements
8-7 © The McGraw Hill Companies, Inc., 2000

9 8-8 © The McGraw Hill Companies, Inc., 2000

10 Map 8.1 8-9 © The McGraw Hill Companies, Inc., 2000

11 European Union GDP 8-10 © The McGraw Hill Companies, Inc., 2000

12 European Union and the US (April, 1998)
8-11 © The McGraw Hill Companies, Inc., 2000

13 US Top European Trading Partners
$ Billions 8-12 © The McGraw Hill Companies, Inc., 2000

14 Annual Real GDP Growth Rates
EU and US Annual Real GDP Growth Rates % 8-13 © The McGraw Hill Companies, Inc., 2000

15 EU and US Unemployment % 8-14 © The McGraw Hill Companies, Inc., 2000

16 EU and US Inflation % 8-15 © The McGraw Hill Companies, Inc., 2000

17 630 directly elected members
EU Governance European Council European Commission 20 Commissioners appointed by members for 4 year terms Heads of State and Commission President Proposing, implementing, monitoring legislation. Resolves policy issues Sets policy direction. Council of Ministers 1 representative from each member Ultimate controlling authority. No EU laws w/o approval. European Parliament Court of Justice 630 directly elected members Propose amendments to legislation, veto power over budget and single-market legislation, appoint commissioners. 1 judge from each country Hears appeals of EU Laws. 8-16 © The McGraw Hill Companies, Inc., 2000

18 Map 8.2 8-17 © The McGraw Hill Companies, Inc., 2000

19 North American Free Trade Agreement
Became law: January 1,1994 Over 15 year period: tariffs reduced (99% of goods traded) NTBs reduced investment opportunities increased Protects intellectual property Applies national environmental standards Special treatment for many industries 8-18 © The McGraw Hill Companies, Inc., 2000

20 NAFTA and Mexico Maquiladora Millions of Workers 8-19
© The McGraw Hill Companies, Inc., 2000

21 Employment in Foreign-Operated Factories in Mexico
8-20 © The McGraw Hill Companies, Inc., 2000

22 Canadian Workers Move South Thanks to NAFTA
Thousands 8-21 © The McGraw Hill Companies, Inc., 2000

23 Andean PACT Map 8.2 8-22 © The McGraw Hill Companies, Inc., 2000

24 ANCOM: Andean Pact Bolivia, Colombia, Ecuador, Peru, Venezuela
Cartagana Agreement, One of oldest still in existence Population: 97 mm (14% of hemisphere) GNP: $122.6 billion Changed from FTA to customs union in 1992 8-23 © The McGraw Hill Companies, Inc., 2000

25 US Trade With The Andean Community
$ Billions 8-24 © The McGraw Hill Companies, Inc., 2000

26 Mercosur Map 8.2 8-25 © The McGraw Hill Companies, Inc., 2000

27 The Mercosur Accord 1988: Argentina, Brazil. 1990: Paraguay, Uruguay
1995: Agreed to move toward a full customs union. Population: 209 mm (27% of hemisphere) GNP: $656.6 billion (8% of hemisphere) Trade doubled in first 3 years 8-26 © The McGraw Hill Companies, Inc., 2000

28 US Trade With Mercosur 8-27 $ Billions
© The McGraw Hill Companies, Inc., 2000

29 Other Hemisphere Associations
Central American Common Market CARICOM Free Trade Area of the Americas 8-28 © The McGraw Hill Companies, Inc., 2000

30 ASEAN 8-29 © The McGraw Hill Companies, Inc., 2000

31 Association of Southeast Asian Nations
Created in 1967 400 million citizens Economic, political and social cooperation Brunei, Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. 8-30 © The McGraw Hill Companies, Inc., 2000

32 Association of Southeast Asian Nations
8-31 © The McGraw Hill Companies, Inc., 2000

33 Net Flows of Private Capital to Indonesia, Malaysia, Philippines, South Korea and Thailand
Thru April 30. 8-32 © The McGraw Hill Companies, Inc., 2000

34 Asian Trade Flows 8-33 Destination of Exports Source of Imports %
© The McGraw Hill Companies, Inc., 2000

35 Map 8.3 8-34 © The McGraw Hill Companies, Inc., 2000

36 Asia Pacific Economic Cooperation
Founded in 1989 to ‘promote open trade and practical economic cooperation’. ‘Promote a sense of community’. 18 members GDP: $13 trillion (1995) 50% of total world income 40% of global trade 8-35 © The McGraw Hill Companies, Inc., 2000


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