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International Business And The Regions Essay

International Business and the Regions In the era of globalization, the primary scope of agencies, institutions and players across the world seems the creation of a free international market place. The efforts so far made have however been insufficient to create such a market place, but impressive successes were observed in terms of the creation of regional market places. In other words, the modern day economic society has managed to support and concretize its efforts in the direction of regional economic development.

Regional economic integration

Regional economic development is virtually understood as a context in which countries in the same global region direct their endeavors in the sense of creating an economically integrated region. They virtually focus on free trade and migration of goods, people, commodities, technologies and capitals and they strive to reduce the barriers between the respective economies. Jacques Pelkmans (2006) defines economic integration as "the elimination of economic frontiers between two or more economies. In turn, an economic frontier is any demarcation over which actual and potential mobilities of goods, services and production factors, as well as communication flows, are relatively low. On both sides of an economic frontier, the determination of prices and quality of goods, services and factors is influenced only marginally by the flows over the frontier."

The primary benefits of regional economic integration refer to the stimulation of trade operations between the countries in the agreement, the creation of greater consensus, the support of enhanced political cooperation and an increased international competition (Xing). In terms of the actual means in which regional economic integration can be created, these refer to the following:

The creation of an economic union through the harmonization of economic principles

The creation of the common market through factor mobility

The creation of custom unions through common external trade policies, or The creation of free trade areas through the signing of free trade agreements between regional states (Czinkota and Ronkainen, 2007).

4. Regional economic integration in North America

The years since 1990 have been marked by intense efforts of regional economic integration, the most representative ones being obvious within North America, where the economic agents and the governments both cooperated...

The most important of these agreements is the NAFTA -- North American Free Trade Agreement, signed in1994 by the United States, Canada and Mexico. The agreement has been assessed with both praises as well as criticism, to hereby constitute a major part in the analysis.
The first step in appraising the regional economic integration between the United States, Canada and Mexico is that of looking at the trade and investments in the region in order to identify the levels and types of integration.

a) Trade

Immediately after the NAFTA was signed, the three countries commenced to eliminate their barriers. In 1994 for instance, Mexico eliminated 50 per cent of its barriers, to eventually come in 2003 to eliminate all of them. In terms of trade, the agreement generated the following outcomes:

Total trade in goods between the three states has increased from $297 billion in 1993 to $883 billion in 2006, revealing a 198 per cent increase

The exports of United States products into Canada and Mexico increased from $142 billion in 1993 to $364 billion in 2006 -- a 157 per cent increase

The imports Canadian and Mexican products into the United States increased from $151 billion in 1993 to $500.7 billion in 2006 -- a 125 per cent increase

The export of services from the United States to Canada and Mexico increased by 289 per cent (Export Gov, 2011).

b) Investments

At the level of investments, these are also consistent with the increases in trade as well as consistent with the regional efforts towards economic integration. Specifically, the investments of the United States into Canada and Mexico have increased by 189 per cent. The investments accumulated $61.7 billion in 1993 and had reached $331.2 billion in 2006. Canadian and Mexican direct investments in the United States cumulated $166.1 billion.

These increases in investments are pegged to the existence of regulations and policies which protect investments and ensure correctness and transparency.

"With limited exceptions, NAFTA requires U.S. investors to be treated in Mexico and Canada as well as those countries treat their own investors or investors of any other country in the establishment, acquisition, and operation of investments. NAFTA also guarantees investors the right to receive fair market value for property in the event of an expropriation.…

Sources used in this document:
References:

Buckley, P.J., Clegg, J., Forsans, N., Reilly, Increasing the size of the 'country': regional economic integration and foreign direct investment in a globalized world economy, http://findarticles.com/p/articles/mi_hb3265/is_3_41/ai_n28873065 / last accessed on May 27, 2011

Czinkota, M.C., Ronkainen, I.A., 2007, International marketing, 8th edition, Cengage Learning, ISBN 0324317026

Day, B., The NAFTA Nightmare, Multinational Monitor, http://multinationalmonitor.org/hyper/issues/1992/10/mm1092_10.html last accessed on May 27, 2011

Dodge, D.., 2003, Economic integration in North America, Bank of Canada http://www.bankofcanada.ca/2003/08/speeches/economic-integration-north-america-2 / last accessed on May 27, 2011
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