ADM 3318 Chapter Notes - Chapter 8: Mercosur, Economic Integration, North American Free Trade Agreement
Document Summary
Regional economic integration: agreements among countries in a geographic region to reduce and ultimately remove tariff and non-tariff barriers to free flow of goods, services, and factors of production between each other. Examples: nafta (canada, us, and mexico); eu (european union); mercosur (uraguay); safta (south america); apec (pacific nations). The move toward rei can potentially benefit consumers but not firms. Levels of economic integration: free trade: no tariffs, quotas, subsidies, or admin. impediments are allowed between member states. Can impost protection regulations for inward flow: customs market: eliminates trade barriers between members and common ext. trade, common market: no barriers to trade between members, common external trade policy. International trade theory states that countries should produce/export those products that they can produce most efficiently. Stimulates economic growth through fdi benefits (transfer of technological, marketing, and managerial know-how to host nations). The political case for integration: making linked and interdependent economies creates incentive for political cooperation.
