Lecture 10 - Lecture 10 Regional Economic Integration 1...

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1 Lecture 10 Regional Economic Integration
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2 Outline A. Introduction B. Level of Economic Integration C. The Case for Regional Integration D. Impediments to Integration E. European Union (EU) F. Regional Economic Integration in the America G. Regional Economic Integration in Asia H. Managerial Implications
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3 A. Introduction Regional Economic Integration Agreements among countries in a geographical region to reduce, and ultimately remove, tariff and non-tariff barriers to the free flow of goods, services, and factors of production among each other Examples: EU (European Union) NAFTA (North American Free Trade Agreement) APEC (Asia Pacific Economic Cooperation) Regional economic integration: good or bad?
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4 5 types of economic integration: Free Trade Area Customs Union Common Market Economic Union Political Union B. Level of Economic Integration
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5 B. Level of Economic Integration Free Trade Area All barriers to the trade of goods and services among members are removed Each member country can determine its own trade policies with regard to non-member countries Examples EFTA (European Free Trade Association) Includes Iceland, Liechtenstein, Norway and Switzerland NAFTA (North American Free Trade Agreement) Includes US, Canada and Mexico
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6 B. Level of Economic Integration Customs Union Eliminates trade barriers between members Adopts a common external trade policy Example: Andean Community Includes Bolivia, Colombia, Ecuador, Peru and Venezuela Establishes free trade among member countries and imposes a common external tariff (5%-20%) on products imported from outside
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7 B. Level of Economic Integration Common Market Has no barriers to trade between members Has common external trade policy Allows factors of production to move freely among members Example: MERCOSUR Includes Argentina, Brazil, Paraguay and Uruguay Aims to eventually establish itself as a common market
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8 B. Level of Economic Integration Economic Union Allows free flow of products and factors of production between members Has common external trade policy Has common currency Harmonization of members’ tax rates Has common fiscal and monetary policy Example: European Union Consists of 27 European countries
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This note was uploaded on 11/02/2009 for the course FB AF2602 taught by Professor Aliceshiu during the Winter '08 term at Polytechnic University of Puerto Rico.

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Lecture 10 - Lecture 10 Regional Economic Integration 1...

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