Regional Intergration

Regional Integration

In a world of free trade, regional integration has become a major contributor to falling prices on various products and services that are marketed to consumers around the world. The integration of countries helps to stimulate growth in the global economy which affects each country in its bloc in a positive and negative way. These countries within the regional integration have a comparative advantage because of their purchasing power, which enables them to produce an efficient and effective product to its consumers whom are located around the world. The objective here today, is to discuss the advantages and disadvantages of regional integration and its economic development stages in promoting global business.

Regional integrations Role:

Globalization is shaping the lives of people and their environment by way of culture and technology. Due to the advancement in technology, the world has become a smaller place to live and do business in. This technology has created advantages and disadvantages for citizens in many countries. Perhaps, the primary reason for regional integration is to better manage this multifaceted economy, which consists of various political, economical, and social changes. According to Evan A. Feigenbaum Deputy Assistant Secretary of State South and Central Asian Affairs

Well, capital no longer flows from just a few major markets but from many. Technology and also skills are more diffused. The private sector plays the critical role in driving investment. And again, the rising power of Asia has inextricably altered the shape of world markets and created major shifts in production, capital flows, and trade (Feigenbaum, 2007, paragraph 8).

Therefore, regional integration helps to bring neighboring countries together and provide better governing in each bloc, which adds to the success of each country and its stability in this complex economy.

Disadvantages of Integration in NAFTA:

Critics against NAFTA’s regional integration have argued that globalization affects their country’s economy. This argument pertains to the loss of jobs, competiveness, and perhaps the change in culture or environment in others. Economists have concerns about U.S. auto maker’s verses foreign auto companies. Also, the goals set out by NAFTA and the U.S. Mexican and trade flows. One of NAFTA’s primary objectives, where to strengthen the economy domestically and increase growth from its market shares from other countries outside of its bloc. NAFTA has failed on some of its goals about helping the living standards of American citizens. According to Alan Tonelson author of the article NAFATA at 10 – A Miserable Failure

As the United States saw its Mexico trade balance change from a surplus to a big deficit, NAFTA added to the growth of the ballooning global deficits and debts that threaten America’s long-run living standards.

As for the 1990s boom, the U.S. economy so dwarfs U.S.-Mexico trade that it's laughable to credit NAFTA -- even a little bit. Moreover, hindsight is making clear that the '90s boom was really a '90s bubble, inflated by Federal reserve shenanigans, massive foreign borrowing, and New Economy hype that created wild overinvestment in technology products and "irrationally exuberant" financial markets, to quote Alan Greenspan's memorable phrase.

NAFTA opponents have propagated some fallacies as well. Just as NAFTA could not have sparked the '90s boom, its effects alone cannot be the root of all evil and woe in a U.S. economy so much bigger than North American trade and investment flows. And Mexico really has had no choice but to increase exports and integrate itself more thoroughly with the United States (Tonelson, 2004, paragraph 6).

These problems are why many economists feel that NAFATA’s regional integration has more of a disadvantage than a positive affect on a global economy for U.S. citizens.

Advantages of NAFTA’s Integration:

Canada and its relationship with the U.S. has been an advantage to the global economy. Canada is the U.S largest trading partner in the world. Both countries have established an ease of commuting between its borders. Also, Canadian cities are approximately an hour and a half from the U.S. which makes transporting goods and services economical for both countries. NAFATA policies also make elimination of duties, direct investments in other countries easier, and access to Mexico’s labor markets. National sovereignty concerns are a advantage for countries with in the NAFTA’s integration bloc. According to Charles W.L. Hill author of Global Business