Chap008 - Chapter 8 Regional Economic Integration Case:...

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Chapter Regional Economic Integration 8
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Case: Increasing competition in the European automotive market In 2002 significant variances remained in price of Automobiles across different countries Primary reasons for price differentials is the Bloc exemption clause In 2002 European commission scrapped the clause and introduced new legislation to encourage competition New rules aimed at weakening control of auto companies on pricing in different markets
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Levels of economic integration Free trade area Customs union Common market Economic union Political union
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Levels of economic integration Fig 8.1
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Economic case for integration Stimulates economic growth in countries Increases FDI and world production Countries specialize in those goods and services efficiently produce. Additional gains from free trade beyond the international agreements such as GATT and WTO Because they may be easier to negotiate outside of the GATT and WTO
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The political case for integration Economic interdependence creates incentives for political cooperation This reduces potential for violent confrontation. Together, the countries have more economic clout to enhance trade with other countries or trading blocs
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Impediments to integration Integration is hard to achieve and sustain Nation may benefit but groups within countries may be hurt Potential loss of sovereignty and control over domestic issues
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Regional economic integration in Europe Europe has two trade blocks European Union Seen as the emerging power with almost 25 members European Free Trade Association Has only four members
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Product of two political factors: Devastation of WWI and WWII and desire for peace Desire for European nations to hold their own, politically and economically, on the world stage 1951 - European Coal and Steel Community. 1957- Treaty of Rome establishes the European
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This note was uploaded on 09/08/2011 for the course MGNT 3650 taught by Professor Grimes during the Spring '11 term at Georgia Southwestern.

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Chap008 - Chapter 8 Regional Economic Integration Case:...

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