Peng Inst Chapter 8 REVISED (2nd Edition)

Peng Inst Chapter 8 REVISED (2nd Edition) - Peng...

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Peng  Global Business 2e Chapter 8 Capitalizing on Global and  Regional Integration 1
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LEARNING OBJECTIVES 1. Make the case for global economic integration. 2. Explain the evolution of the GATT and the WTO, including current challenges. 3. Make the case for regional economic integration. 4. List the accomplishments, benefits, and costs of the EU. 5. Identify the five organizations that facilitate regional trade in the Americas and describe their benefits and costs. 6. Identify the three organizations that promote regional trade in Asia Pacific and describe their benefits and costs. 7. Understand why regional trade deals are not effective in Africa. 8. Participate in two leading debates on global and regional economic integration. 9. Draw implications for action. 2
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ECONOMIC INTEGRATION Global economic integration  - efforts to reduce trade  and investment barriers around the globe (e.g., WTO). Regional economic integration  -   efforts to reduce trade  and investment barriers within one region (e.g., EU, DR- CAFTA, NAFTA). Chapter is about how changes in the rules of the game  via global and regional integration (institution-based view)  lead firms to better develop and leverage their capabilities  (resource-based view). 3
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GLOBAL ECONOMIC INTEGRATION Mercantilist trade wars during the 1930s  worsened the Great Depression and  contributed to World War II. Global integration had its birth with the GATT  (General Agreement on Tariffs and Trade) in  1948 and evolved into the WTO. In Europe, regional integration started in 1951  and evolved into the EU.  4
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Political Benefits for Global  Economic Integration  In the late 1920s and early 1930s, many  governments protected domestic industries  through tariffs and quotas. These “beggar thy neighbor” policies  triggered retaliation that continued to  restrict trade (see Figure 8.1). Eventually trade wars contributed to World  War II. 5
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Political Benefits for Global  Economic Integration  Global economic integration provided   economic benefits, but it also had  two  political benefits (see Table 8:1)   Promoting peace  (countries that do business  with each other are less likely to go to war). Building confidence  in a multilateral system -  lack of confidence and trust led to the trade  wars in the 1930s. 7
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Economic Benefits for Global  Economic Integration Three benefits: 1. Disputes are handled constructively - the WTO’s  dispute resolution mechanism. 2.
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Peng Inst Chapter 8 REVISED (2nd Edition) - Peng...

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