Regional Integration (Advantages And Disadvantages) Essay

1251 words - 5 pages

In this paper, I will select a region, chose a trading bloc within that region, and write an article in favor of regional integration and another against it. I will also describe the advantages and disadvantages of regional integration within both articles and relate the stage of economic development of the economically integrated region to potential business opportunities. Before stating my opinions of why I would be for regional integration and then, why I would be against it, I will define the term for clarification and understanding.According to Hill, regional economic integration are agreements among countries in a geographic region to reduce, and ultimately remove tariff and non-tariff barriers to the free flow of goods, services, and factors of productions between each other (Hill, 2009). For sake of simplicity, I have chosen the North American region, with NAFTA as the trading bloc to state my favor of regional integration for the region, and my disapproval of it.It is important as well, before beginning my articles, that one understands basic details of NAFTA. In 1994, the United States, Canada, and Mexico, reached an agreement that promised to remove all barriers to the free flow of goods and services between the countries and instituted a phasing out of tariffs and other fees to encourage free trade (InvestorWords, 2009). This agreement coincides directly with the purposes of regional integration, and there are positive and negative effects of such actions.Article One (In favor of regional integration)Regional integration in North America has faced opposition but not surprisingly, much support as well. It is beneficial that manufacturing would be moved to Mexico where labor is less expensive, and today many businesses have taken profitable advantage on this cost-saving opportunity. Such a move is a clear benefit to Mexico because of the creation of jobs and boosting of its economy. The United States and Canada would thus benefit from Mexico's boosted economy, allowing the two countries to further export products and services to Mexico. Regional integration allows disadvantaged countries, such as Mexico, to realize economies of scale, compete on a broader platform, and increase overall economic efficiency (OECD, n.d.). For the aforementioned region, the demand for products from the U.S. and Canada will increase and in turn, make up for production losses in those countries.Since the three countries entered regional integration through the NAFTA agreement, trade and investment has expanded and trade among the NAFTA nations has more than tripled from $297 billion to $930 billion, and business investment has risen by 117% since 1993 (U.S. Trade Representative [USTR], 2009).In addition, U.S. employment rose from 110.8 million people in 1993 to 137.6 millon in 2007 (USTR). Mexican wages have continued to grow since the 1994 peso crisis, while studies have shown that Mexican industries that export or that are in regions with a higher...

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