A Comparison Between Multilateralism and Regionalism in Terms of Efficiency

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London South Bank University & University of Applied Sciences Mainz Master of Science – International Business

Course: International Business Economics

Title: New Regionalism (2,002 words)
Lecturer: Prof. Dr. Ulrich Schüle

Assignment: What do you understand by the "new regionalism"? Discuss whether the effects of this are positive or negative in economic efficiency terms of the global economy.

Tobias Baumert Hinter der Kirche 17 55129 Mainz

London South Bank University - ID: 2906244 University of Applied Sciences - ID: 901712 27 November 2012 1  

 

Table of Contents
Introduction................................................................................................. 1 1. Why Multilateralism leads to Impasse..................................................... 1 2. The Way to New Regionalism................................................................. 2 2.1 Static Effects........................................................................................ 3 2.2 Dynamic Effects................................................................................... 4 2.3 Political Condition................................................................................. 5

3. Conclusion.............................................................................................. 6

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List of abbreviations
CAP EC EC 6 ECU EEC EU e.g. FOEGA FTA GATT GDP LDC MFA NAFTA NTB RTA ROW TC TD ToT USA WTO Common Agricultural Policy European Community Belgium, France, Germany, Italy, Luxembourg, Netherlands European Currency Unit European Economic Community European Union exempli gratia European Agricultural Guarantee and Guidance Fund Free Trade Agreement General Agreement on Tariffs and Trade Gross Domestic Product less developed country Multi-fibre Agreement North American Free Trade Agreement Non-Tariff Barrier Regional Trade Agreement rest of the world Trade Creation Trade Diversion Terms of Trade United States of America World Trade Organisation

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List of figures
Figure 1: Gains from the Single EU Market (Salvatore, 2007, p.351 based on Cecchini, 1992) Static Effects: Trade Creation & Trade Diversion (Feenstra, Taylor, 2008. Salvatore, 2007) Figure 2: Figure 3: Figure 4: Figure 5: Figure 6: Figure 7: Figure 8: Figure 9: Figure 10: Regional Trade Agreements in the globalised world (le Monde, p.13) Employment in the global clothing industry (Dicken, 2007, p.252) Regional proportions of world trade in clothing (Dicken, 2007, p.252) Economy and Production Allocation (le Monde, p.27) Worldwide Exports - Industrial Goods and Services (le Monde, p.31) World Trade - Proportion of Sectors and Region (le Monde, p.31) World Economy and Political Alliances (le Monde, p.15) Inter & Intra regional Trade, worldwide 2000 (le Monde, p.32) Inter & Intra regional Trade, worldwide 2010 (le Monde, p.33)

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Introduction Regionalism and bilateral trade agreements best embody the global trade relations in its contemporary form. In contrast multilateralism and free trade agreements (FTA) with a global approach constitute trade patterns without any loss of welfare and seem to be still a futuristic wishful thinking. However, the infant industry argument, cultural and social influences of economic development and the historical background of Eastern and Southern countries explain the restrained engagement. Consequently the idealistic desire forming a World Trade Organisation (WTO), which would overthrow protectionist borders, was a fallacy. Moreover, the increasing amounts of participants inhibit the decision-making power of the institution and reveal that contemporary trade must be improved. Generally the conflict between the West and the ROW is based on agricultural goods as well as industrial products and services in terms of trade regulations. Will a regional-based solution help the environment to develop new economic trade and reduce its dependence and what...
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