...Economic Integration, according to Investopedia online, is, “an economic arrangement between different regions marked by the reduction or elimination of trade barriers and the coordination of monetary and fiscal policies. The aim of economic integration is to reduce costs for both consumers and producers, as well as to increase trade between the countries taking part in the agreement.” According to Norman Girwan, in his paper entitled, ‘Caricom’s Elusive Quest For Economic Integration,’ the Caribbean needed to integrate for similar reasons. Girwan states that the move toward such integration was driven by the need to mitigate against the constraints of small size on development, as well as there were other non-eceonomic objectives. These included “attaining national independence, sharing the costs of common services, pooling bargaining power in international environment and instituting a common West Indian identity.” Girwan continues by stating emphatically that “economic integration is still a work in progress for the Caribbean peoples; and what has been accomplished so far has not impacted significantly on regional economic development.” He attests that “this could be due to faulty implementation of agreed integration schemes, or to inappropriate design of the schemes themselves, or to inherent limits in the capacity of economic integration per se to drive development in these economies.” In a similar manner, Mehmet Ekizoglu, in his paper Mercosur, It’s History, Institutions...
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...Mercosur: Present and Future Xiao Li Brenau University 02/20/2012 Mercosur: Present and Future Background Mercosur, known as the Common Market of the South, was founded by Paraguay, Uruguay, Brazil and Argentina under the Treaty of Asuncion signed in March 1991, which was amended and updated by the 1994 Treaty of Ouro Preto, it took effect on January 1, 1995 and formalised a customs union (Connolly, 1999). Mercosur’s headquarter is in Montevideo, Uruguay . Several other countries were admitted as associate members including Chile, Bolivia, Colombia and Peru. Venezuela is currently in the process of integrating into the bloc and it will become a full member once all members’ parliaments ratify its accession (Bosworth, 2011). Since it was established, Mercosur has made remarkable achievements. It is now South America’s leading economic integration organization and the world's fourth largest integrated market after the European Union, North American Free Trade Agreement and the Association of South East Asian Nations. Moreover, the scope of cooperation is expanding to other areas, particularly the political and diplomatic fields. Objectives Mercosur’s main objectives include: through the effective use of resources, coordination of macroeconomic policies, to strengthen the economic complementation and promote economic development, thereby improving people's living conditions, and promoting regional economic integration...
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...the Treaty of Asunción on the Institutional Structure of MERCOSUR Protocol of Ouro Preto * Date: December 17, 1994 * Number of Chapters and Articles: 12 Chapters and 53 Articles * Main Motive: To create an institutional structure for MERCOSUR In this protocol, the institutional structure of the MERCOSUR was defined. Each article describes in detail the languages to be used, the various bodies, their roles and their objectives. The various bodies identified under this are: * Common Market Council: The CMC is comprised of the ministers of Foreign Affairs and of the Economy of the four countries. It is the highest-level organization in charge of MERCOSUR’s decision-making and it is responsible for overseeing compliance with the strategic objectives laid out in the Asunción Treaty and the Ouro Preto Protocol. The Council meets twice a year, in two-stage sessions: the first involves only the ministers that make up the CMC, and the second includes the presence of the countries’ presidents. In spite of being the highest-level organization, the Council has delegated many of its responsibilities to the Grupo Mercado Común (GMC, Common Market Group), thus diminishing its ability to generate policies and promote actions aimed at consolidating MERCOSUR. In practice, the Council’s meetings have had political importance in terms of setting grand directions and sending political signals within and outside of MERCOSUR. * Common Market Group: The CMG is made up of four...
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...ECONOMIC INTEGRATION The process of Economic Integration arises when a group of nations in the same geographical area join together to form an economic union or a regional trading bloc by raising a common tariff wall against the products of non-member countries while freeing internal trade among members. Opposing tariffs can also differ among members when trading with external partners, this is called a customs union, but in a free trade zone among members is called a free-trade area. All this culminates in a common market, which includes also the free movement of labour and capital among the member states, forming the most advanced type of economic integration, the economic union. Examples of a complete economic and monetary union are the United States. Free trade leads to the most efficient utilization of world resources and thus maximizes world output and welfare, our goal is to increase welfare by practising free trade. A customs union can reduce and increase welfare, to insure that welfare is increased the customs union should be formed under the following conditions: 1. the higher the preunion trade barriers of member countries. There is then a greater probability that formation of the customs union will create trade among union members rather than divert trade from non-members to members. 2. The lower are the customs union’s barriers on trade with the rest of the world. This makes it less likely that formation of the customs union will lead to costly trade diversion. 3...
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...Latin America, out of IMF’s control World Economy and Latin America 20 December, 2011 Contents Introduction Past relationship between Latin America and IMF How LAC could get out of IMF’s control Conclusion Introduction Latin America was a volatile region with a history of exceptionally high inflation rates, substantial macroeconomic instability, and a record of unsuccessful monetary and fiscal stabilizations. However, during the past decade, Latin America’s economy has strengthened their body and benefited from high exports, strong economic growth in its trading partners and good global financial conditions and domestic policies. All of this is related with international financial institutions and one of IFIs, International Monetary Fund had affected in currency perspective in the region. In this paper, I will search the changing relationship between Latin America and one of IFIs, IMF whose role is so involved with Latin America’s economy. The first session will explain the relevance between the region and IMF and in the following part, there will be the reasons that Latin America could escape from IMF’s control. Past relationship between Latin America and IMF The IMF was set up to assist countries that had temporary current account deficits and lacked a sufficient quantity of official reserve assets to support a fixed exchange rate. However, the slow motion collapse of the fixed exchange rate system in the 1970s created an odd situation for the IMF. At about the...
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...Chapter 8 ECONOMIC INTEGRATION QUESTION 7: After a promising start, MERCOSUR, the major Latin American trade agreement, has faltered and made little progress since 2000. What problems are hurting MERCOSUR? What can be done to solve these problems? There are several reasons why Mercosur can be considered an unsuccesful trade agreement: 1. Member countries are not yet politically mature to commit to long term agreements that can be respected by the the future rulers of each country. Instead, it’s usually seen that political candidates adjust their plans to gain new voters according to the circumstances of the moment, not keeping focused on the long term. Being realistic, there is not much that can be done to change this situation. There is a little hope that country members can some time in the future take example of their neighbouring Chile, where the political parties after the dictatorial times of Pinochet (his government included), committed to pull the country out of undervelopment and have remained firm to that ideology regardless of the political beliefs of each party in power. Keep in mind that Chile is not a full member of Mercosur, just an associate one. 2. Economic difficulties some members have experienced in different moments since Mercosur was created, which has led to embrace local reforms that not always are consistent with the trade agreement; for example, by changing the “common” external tariff to protect a national industry, as has done Kirchner government...
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...agreements and the pursuit of state interests: institutional perspectives from NAFTA and Mercosur Francesco Duina and Jason Buxbaum Abstract Are regional trade agreements (RTAs) carefully crafted projects that systematically advance their member states’ interests or do they instead generate outcomes that frustrate those interests? Works on the most prominent RTA Á the European Union Á have traditionally been split over this question. New research on international organizations parallels that literature. Combining rational choice and historical institutionalism, this article makes a middle-ground case: the limited rationality of national representatives and the complexity of RTAs ensure both the advancement and frustration of national interests. The focus is on shifting national preferences, the unpredictable implications of decisions over time and the pursuit of short-term gains to the benefit of some constituents but not others. Evidence from NAFTA and Mercosur supports these claims while highlighting, in line with recent scholarship, the need to include politics in institutionalist accounts of integration. The conclusion reflects on the findings and explores whether alternative, more flexible designs for RTAs might satisfy more fully the interests of the member states. Keywords: regional trade agreements; rational choice institutionalism; historical institutionalism; NAFTA; Mercosur; international organizations. Francesco Duina and Jason Buxbaum, Department of Sociology...
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...10/24/2014 Mercosur: South America's Fractious Trade Bloc - Council on Foreign Relations Mercosur: South America's Fractious Trade Bloc Authors: Joanna Klonsky, Associate Editor, Stephanie Hanson, and Brianna Lee Updated: July 31, 2012 This publication is now archived. Introduction What is Mercosur? What are associate members? Why was Paraguay suspended as a Mercosur member? What are the implications of Venezuela joining as a full member? Does Mercosur have a political agenda? How does Mercosur affect other regional groups? How has Mercosur stimulated cooperation among its members? What are the prospects for Mercosur's future? Introduction Mercosur, the "Common Market of the South," is an economic and political agreement among Argentina, Brazil, Paraguay (which is currently suspended), and Uruguay to promote the free movement of goods, services and people among member states. Mercosur's primary interest has been eliminating obstacles to regional trade, such as high tariffs and income inequalities. Yet experts say Mercosur has become somewhat paralyzed in recent years, with its members divided over whether the organization should remain focused on regional trade or whether it should add political affairs to its mandate. In July 2012, Venezuela was admitted to the trade bloc as its fifth full member with complete access to the common market and voting rights, a move that some analysts say will primarily benefit Argentina and Brazil and further politicize the organization...
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...Regional Economic Integration Learning objectives • Be able to explain the different levels of regional economic integration. • Understand the economic and political arguments for regional economic integration. • Understand the economic and political arguments against regional economic integration. • Be familiar with the history, current scope, and future prospects of the world’s most important regional economic agreements. • Understand the implications for business that are inherent in regional economic integrations agreements. This chapter discusses regional economic integration, agreements among countries within a geographic region to achieve economic gains from the free flow of trade and investment among themselves. There are five levels of economic integration. In order of increasing integration, they include free trade area, customs union, common market, economic union, and full political union. Integration is not easily achieved or sustained. Although integration brings benefits to the majority, it is never without costs for the minority. Concerns over sovereignty often slow or stop integration attempts. The creation of single markets in the EU and North America means that many markets that were formerly protected from foreign competition are now more open. This creates major investment and export opportunities for firms within and outside these regions. The free movement of goods across borders...
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...Brazil : embracing globalization This case is about Brazil's development strategy since World War II and about the change of the economic model following the debt crisis of the 1980s. In 2000, Brazilian officials were pondering whether to go for regional integration (Mercosur) or globalization to ensure the country's economic prosperity and development. Import-substitution strategy After the Great Depression of the 1930s, Brazil followed an import substitution strategy which consisted of massive government investment, targeting of key industries, and protection against competition with high tariffs walls. 1. Positive effects of this policy : the Brazilian economy experienced rapid growth and considerable diversification. From 1950 to 1961, the average annual rate of growth of the gross domestic product exceeded 7 percent. Industry was the engine of growth. It had an average annual growth rate of over 9 percent between 1950 and 1961, compared with 4.5 percent for agriculture. Traditional industries, such as textiles, food products, and clothing, declined, while the transport equipment, machinery, electric equipment and appliances, and chemical industries expanded. 2. Negative effects of this policy : substantial increase in imports, especially of inputs and machinery, and the foreign-exchange policies of the period resulted in inadequate export growth. A large influx of foreign capital in the 1950s resulted in a large foreign debt. Between 1981 and 2000 :...
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...| |MERCOSUR – a POSSIBLE DOWNFALL IN THE ROAD OF A PROMISING FUTURE? | | |[pic] | |Fall 2012 | | | |This paper will be taking a deep look into how Mercosur affected its member countries when it was first created and| | |what the consequences were to take them to where they are now. | | | | | | | Introduction: This paper will take a deep look into a trade agreement created in March 1991 between Argentina, Brazil, Paraguay, and Uruguay, called Mercosur (Mercado Común del Sur, or Southern Common Market). After understanding what a trade agreement is and what are the benefits and disadvantages of being part of one, I will analyze how the agreement changed the economy and overall welfare of the countries involved and how did their interactions changed...
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...disadvantages for Ecuador if it becomes a member of the Mercado Común del Sur (Mercosur). Currently, the world is going through a change in important ways in the economy, the importance of belonging to an economic bloc is that through this you can get "mutual benefits in international trade" The Mercosur as we know is a South American economic bloc that “is integrated by Argentina, the Federative Republic of Brazil, the Republic of Paraguay, the Oriental Republic of Uruguay and the Bolivarian Republic of Venezuela” (Exhibit 1). The countries that belong to the MERCOSUR are differentiated by the alliance of values held and reflected in its democratic and pluralistic societies, the protection of human rights, the environment and sustainable development. MERCOSUR is also committed to strengthening democracy, eradicate poverty and strengthen the economic and social development of the members with equity. In recent years the President of Ecuador Econ. Rafael Correa expressed his desire to become a member of this economic bloc, but what does it mean to Ecuador to join to this organization? This economic bloc offers attractive proposals for countries; among them is the establishment of a common external tariff, plus the free movement of goods and services between the member countries. For a developing country like Ecuador, it is difficult to make the decision of belonging to an economic bloc, as it must evaluate the economic factors that affect and the conditions under which it should enter...
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...Getting to Know Mercosur Zak K. Blondis University of Memphis: Fogelman College of Business and Economics Abstract This paper is a brief overview of Mercosur and its current state, and will focus on the background, formation, global and regional impact of Mercosur and its members as well as the current dilemmas that are being faced. Issues ranging from economic to political will be discussed throughout. Internal disputes and protectionist policies place Mercosur in an uncertain situation as they focus to defend their own domestic products all whilst maintaining a steady external trade. A continuing worldwide economic power house, Mercosur continues to struggle with certain facets of trade and political structure. Background South America throughout past decades has seen bloodshed and political instability, and despite much improvement there is still reoccurring corruption to date. Although the Pablo Escobar reign in Colombia, Noriega’s rule in Panama, and Castro’s hold on Cuba are no longer relevant, there still remains similar political instability today. Mercosur directly translated is Mercado Comun del Sur, or The Southern Common Market, and is a trade bloc for six of South America’s member nations (See Appendix A for current member countries) where they enjoy free trade, very similar to that of the North American Free Trade Agreement, where the goal is full South American economic integration. Enacted in 1991 under the Treaty of Ascuncion, Mercosur was created around...
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...Economic Integration The concept of “Economic Integration” has been growing in significance for the past 50 years and was established by economists who investigated the early attempts of European countries to combine separate economies into larger economic regions.18 More specifically, economic integration—also called “regional integration”—refers to the discriminate reduction or elimination of trade barriers among participating nations. This also implies the establishment of some form of cooperation and coordination among participants, which will depend on the degree of economic integration that ranges from free-trade areas to an economic and monetary union. Integration among countries in a geographical region to reduce, and ultimately remove, tariff and non-tariff barriers to the free flow of goods, services, and factors of production among each other. For examples: EU (European Union), NAFTA (North American Free Trade Agreement), APEC (Asia Pacific Economic Cooperation) Level of economic integration: The levels of economic integration divided into five different levels and they are shown in figure 1.0. The first one is the Free Trade Area, Custom Union, Economic Union, Monetary Union and then the political union. These five levels are inter- linked with each other; first we have to have the come up with the identification of the free trade area among the participant. Than to ensure the exchange of the goods among the participant a custom union will be required. This custom...
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...A. NAFTA This agreement begins with free trade agreement between Canada and United States in 1988, which took effect in January 1, 1989. This was followed by talks among Canada, Mexico, and United States aimed to establishing free trade agreement among three countries. The talks conclude in 1992 with an agreement in principle, and ratified by the governments of all three countries. 1. NAFTA contents - Abolition within 10 years of tariffs on 99 percent of the goods traded between Mexico, Canada, and United States. - Removal of most barriers on the cross border flow of service. - Protection of intellectual property rights. - Removal of most restriction on FDI between the three member countries. - Application of national environment standards. - Establishment of two commission with the power to impose fines and remove trade privileges. 2. NAFTA case NAFTA should be viewed as an opportunity to create as enlarge and more efficient productive base for entire region. 3. The Case Against NAFTA - Ratification would be follow by a mass exodus job from the United States and Canada to Mexico as employers sought to profit from Mexico lower wages and less strict environmental and labor laws. - Environmentalist pointed out the polluted environment in Mexico. - A loss of national sovereignty. 4. NAFTA the first decade Effects of NAFTA in its first three and a half years: - The initial period since NAFTA took effect had little impact on trends already in place. - Impact on jobs...
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