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© The McGraw Hill Companies, Inc., 2000 Regional Economic Integration Chapter 8.
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Transcript of © The McGraw Hill Companies, Inc., 2000 Regional Economic Integration Chapter 8.
© The McGraw Hill Companies, Inc., 2000
Regional Economic IntegrationChapter 8
© The McGraw Hill Companies, Inc., 2000
Levels of Economic Integration
Free Trade Area
Customs Union
Common Market
Economic Union
Political Union
Level of Integration
NAFTA
EU 1992
8-1
Figure 8.1 in text
© The McGraw Hill Companies, Inc., 2000
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
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
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
Political World Map
8-5
© The McGraw Hill Companies, Inc., 2000
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
Growth of Regional Arrangements
0
100
200
86-91 92-96 47 -97 In Force
RegionalArrangements
8-7
© The McGraw Hill Companies, Inc., 2000 8-8
© The McGraw Hill Companies, Inc., 2000 Map 8.1 8-9
© The McGraw Hill Companies, Inc., 2000
European Union GDP
-2
0
2
4
90 91 92 93 94 95 96 97 98 99
% Growth
8-10
© The McGraw Hill Companies, Inc., 2000
European Union and the US(April, 1998) Europe* USA
Population (mm) 300 267.7% of World GDP 19.4% 19.6%% of World Trade 18.6% 16.6%GDP Growth 2.4% 3.8%Budget Balanceas % of GDP
- 2.8% 0
*Countries likely to be part of common currency: Austria, Belgium, Finland, France, Germany, Ireland, Italy,Luxembourg, Netherlands, Portugal and Spain.
8-11
© The McGraw Hill Companies, Inc., 2000
US Top European Trading Partners
0
0.5
1
1.5
2
2.5
3
3.5G
erm
any
UK
Fra
nce
Ital
y
Sw
itze
rlan
d
Exports toImports from
$ Billions
8-12
© The McGraw Hill Companies, Inc., 2000
-5
0
5
10
15
1992 1993 1994 1995 1996 1997
EU
EUUS
Annual Real GDP Growth Rates
EU and US
%
8-13
© The McGraw Hill Companies, Inc., 2000
0
5
10
15
1992 1993 1994 1995 1996 1997 1998
US
USEU
Unemployment
EU and US
%
8-14
© The McGraw Hill Companies, Inc., 2000
0
1
2
3
4
5
1992 1993 1994 1995 1996 1997 1998 1999P
EU
EU
US
Inflation
EU and US
%
8-15
© The McGraw Hill Companies, Inc., 2000
EU Governance
Heads of State and
CommissionPresident
1 representative
from each member
20 Commissioners appointed by members for 4 year terms
European Council
Resolves policy issues Sets policy direction.
European Commission Proposing,
implementing, monitoring legislation.
Council of MinistersUltimate controlling authority. No EU laws w/o approval. European
Parliament
630 directly elected
members
Propose amendments to legislation, veto power over budget and single-market legislation, appoint commissioners.
1 judge from each country
Court of Justice
Hears appeals of EU Laws.
8-16
© The McGraw Hill Companies, Inc., 2000 Map 8.2 8-17
© The McGraw Hill Companies, Inc., 2000
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
0.4
0.55
0.7
0.85
1
1990 1992 1994 1996 1998
Maquiladora
NAFTA and MexicoMillions of Workers
8-19
© The McGraw Hill Companies, Inc., 2000
Employment in Foreign-Operated Factories in Mexico
400
450
500
550
600
650
700
750
800
93 94 95 96 97
Thousands
8-20
© The McGraw Hill Companies, Inc., 2000
Canadian Workers Move South Thanks to NAFTA
0
5
10
15
20
25
30
1993 1994 1995 1996
Thousands
8-21
© The McGraw Hill Companies, Inc., 2000
Andean PACT
8-22Map 8.2
© The McGraw Hill Companies, Inc., 2000
ANCOM: Andean Pact Bolivia, Colombia, Ecuador, Peru,
Venezuela Cartagana Agreement, 1969. 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
0
5
10
15
20
25
1995 1996 1997
ImportsExports
$ Billions
US Trade With The Andean Community
8-24
© The McGraw Hill Companies, Inc., 2000
Mercosur
8-25Map 8.2
© The McGraw Hill Companies, Inc., 2000
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
0
5
10
15
20
25
30
1995 1996 1997
ImportsExports
$ Billions
US Trade With Mercosur
8-27
© The McGraw Hill Companies, Inc., 2000
Other Hemisphere Associations
Central American Common Market CARICOM Free Trade Area of the Americas
8-28
© The McGraw Hill Companies, Inc., 2000
ASEAN
8-29
© The McGraw Hill Companies, Inc., 2000
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
Association of Southeast Asian Nations
05
101520
253035
4045
GDP Growth (%)
US Export to ASEAN($billion)
8-31
© The McGraw Hill Companies, Inc., 2000
Net Flows of Private Capital to Indonesia, Malaysia, Philippines, South Korea and
Thailand
-20
0
20
40
60
80
100
1991 92 93 94 95 96 97 98
$ Billions
Thru April 30.
8-32
© The McGraw Hill Companies, Inc., 2000
0 5 10 15 20 25
Rest of World
South Korea
Japan
NAFTA
%
Destination of Exports
Source of Imports
Asian Trade Flows
8-33
© The McGraw Hill Companies, Inc., 2000Map 8.3 8-34
© The McGraw Hill Companies, Inc., 2000
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
