What role does International Business play as a driver of Regional Integration?
Intro- In order to decipher the role international business has played in regional integration in the past we must first take a look at the underpinning theory used to describe various models of integration and then go on to examine specific examples, namely that of the EU and South-East Asia. In our discussions of the topic we will present evidence to suggest the development of the two phenomenon simultaneously and then go on to see to what extent international business acted as a driving for -
Describe the different models of Regional Integration that exist today and those that are currently under discussion particularly those that relate to East Asia
There has been a phenomenal increase in the number of International Economics Integration Agreements (EIAs) over the past fifty years. Traditionally regional integration was driven by politics but there has been a shift in policy and countries are now concerned with economics. The intuition behind the EIAs is to reduce control barriers to capital, labour, goods and services in order to improve competitiveness and reduce dead-loss associated with international trade. Fred Bergsten (1996) coined the phrase “Competitive Liberalization”, he noted ‘The rapid increase of global interdependence has forced all countries, whatever their prior policies or philosophies, to liberalize their trade (and usually investment) regimes’. Some countries for cultural reasons, tax purposes or otherwise may not have wanted to open their borders to free trade but were forced to by competitive standards. The global explosion of regional integration has had a noticeable impact on international business, cultural identity and government control the world over.
Models of regional integration have evolved since their inception fifty years ago. The Organisation for Economic Co-operation and Development OECD was originally formed to avoid any future European wars, to encourage cooperation and prosperity, rather than reprimanding and punishing the defeated. The motivations may have been political but the results were economic. The OECD is often seen as one the first successful traditional models of regional integration where trade barriers were lowered for mutual gain and industrialization was fed with import substitution. Even today the European Union, a by-product of the OECD, is used as a template for new regions integrating. The OECD started out as a relatively closed region of just six member countries it has grown to 40 countries that account for 80% of world trade and investment. < http://www.oecd.org/about/history/ >.
Models of regional integration are best dissected along three primary dimensions, these include geographic scope, substantive coverage and depth of integration; by which the degree of sovereignty sacrifice is gauged (Kritzinger-van Niekerk 2005). This is what makes the EU so interesting as a model; it is a fully integrated single market with free movement of capital and people while allowing members to maintain their national sovereignty. This stems from its inception, in post war Europe where nationality was everything countries were determined to keep their sovereignty and this is built into the EU constitution. This of course has led to many difficulties ….(Katie EU stuff I think) don’t want to overlap. The North American Free Trade Agreement (NAFTA) drastically exceeds the EU in terms of economic scope but not in depth of integration. Canada, Mexico, and the United States, together create a trilateral trade bloc in North America. The agreement came into force on January 1, 1994. Trade inside the region is freer than outside i.e. it removed most barriers to trade. Under the WTO it is not allowed to raise barriers to excluded countries. The region was integrated for the purpose of increasing their power in global trade. NAFTA helped stabilize Mexico when it was in crisis by adding...
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