...Introduction This essay will explore the nature of NAFTA and its effect on regional integration as well as state economies from several perspectives. In 1993, the United States, Canada and Mexico signed the North American Free Trade Agreement to achieve the higher level of regional integration. This NAFTA not only concerns the removal of trade barriers, but also aims to promote the movement of capital. Firstly, this essay will explain the evolution of NAFTA and its successful influence on economic integration. Furthermore, this chapter will provide the criticism on the influence of NAFTA. Secondly, this study will discuss the impact of NAFTA on regional integration, particularly economic integration. Then, this essay will propose the understandings on the effect of NAFTA on members’ economies and businesses from four perspectives, including trade, economic growth, employment and FDI. Main body The Evolution of NAFTA The North American Free Trade Agreement (NAFTA) issued in 1993 aims to removal trade barriers and liberalise economics and business among the United States, Canada and Mexico. Compared with similar FTA economic relationship, such as EU, NAFTA is described as the most implemented FTA (Orme, 1996). Like most FTAs, NAFTA not only effectively coordinates resource and improves competitiveness of countries and corporates, but also promotes the movement of products, services and investment, even financial integration. For instance, Krugman & Hanson (1993) stress that...
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...1.!Why did the US, Mexico, and Canada sign the North American Free Trade Agreement? Which sectors would you expect to gain most from this agreement? NAFTA allowed for the free flow of goods and services between the three parties, US, Mexico and Canada by immediate or phased elimination of tariffs on numerous goods. This free trade would in turn lead to comparative advantage i.e. each country could specialize in producing goods/ services in which they are relatively more productive than their trading partners, increasing overall productivity and output. Hence, the parties to NAFTA signed the agreement so that companies can leverage aggregating and arbitration opportunities within the region leading to overall more trade, more jobs and higher GDP. On the side, the countries also hoped for some other interrelated non-economic benefits such as reduction in illegal immigrants from Mexico to US due to availability of more earning opportunities within Mexico. The sectors which were expected to gain most from this agreement were- automobiles (in Canada), textile and apparel (in Mexico), agriculture (in all countries, particularly US), financial and banking services (in US) and energy (especially in US and Canada). 2.!Has NAFTA been beneficial for the countries that signed it? There were numerous positive economic developments after the signing of NAFTA such as: •! Increase in international trade: Mexico’s trade as a % of GDP almost doubled after the NAFTA agreement,...
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...China and South Africa) as a new global growth engine, an alternative export market, and a key sourcing hub. The economic might of BRICS can be gauged from the fact that it accounted for 42.3 per cent of global population, 18.2 per cent (25.7 per cent on PPP basis) of global GDP, 17.8 per cent of FDI and 16.3 per cent of global trade in 2010. However, despite the existence of the huge trade (and investment) potential on account of similar consumer preferences, comparable per capita income, and often complementarities of resource endowment, the intra-regional trade among BRICS nations isn't even 10 per cent of their total trade. INDIA'S TRADE When it comes to India's trade (export and import taken together) with the BRICS, it has grown from roughly US$ 9 billion in 2000-01 to US$ 106 billion in 2010-11. As a result, its share in India's merchandise trade has almost doubled (from 9.4 per cent to 17.1 per cent) in this period. This is quite in contrast to the share of India's traditional trading partners — EU-27 and North America — which has declined from 36.5 per cent in 2000-01 to 22.6 per cent in 2010-11. When it comes to India's export, this decline (in the share of EU-27 and North America) is sharper i.e. 29.3 per cent in 2010-11 from 46.3 per cent in 2000-01. This underlines the growing importance of the BRICS region as a key export market vis-à-vis the developed markets. However, growth in India-BRICS trade isn't homogeneous across all member countries. A deeper analysis of...
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...3 A. 1. FOREIGN DIRECT INVESTMENT TRENDS AND DEVELOPMENTS RECENT TRENDS IN FOREIGN DIRECT INVESTMENT INFLOWS AND OUTFLOWS Global trends 15 Following what seemed to be a swift recovery from the global financial crisis in 2010-2011, global foreign direct investment (FDI) inflows have again taken a downward turn. As the world economic recovery continues to be uncertain and fragile, global FDI inflows have declined by 18%, from $1.65 trillion in 2011 to $1.35 trillion in 2012. Inflows decreased both in developed and developing economies.16 However, while the majority of developed countries experienced a significant reduction in their FDI inflows, by 32% on average, those to developing economies remained relatively resilient, declining by only 4% on average. More importantly, for the first time developing economies alone absorbed more FDI than developed countries, accounting for 52% of global FDI inflows (figure 3.1). Asia-Pacific Trade and Investment Report 2013 FIGURE 3.1 1400 1200 Billions of United States dollars 1000 800 600 400 200 0 2003 Foreign direct investment inflows to developed and developing economies, 2003-2012 2004 2005 2006 2007 2008 2009 2010 2011 2012 Developed economies Developing economies Source: ESCAP calculations, based on UNCTADStat. FIGURE 3.2 2000 Billions of United States dollars 1800 1600 1400 1200 1000 800 600 400 200 0 2003 2004 2005 2006 Foreign direct investment outflows from developed...
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...Investing in a Rebound The 2010 A .T. Kearney FDI Confidence Index® The Global Business Policy Council is a strategic service that assists chief executives in monitoring and capitalizing on macroeconomic, geopolitical, socio-demographic and technological change worldwide. Council membership is limited to a select group of corporate leaders and their companies. The Council’s core program includes periodic meetings in strategically important parts of the world, tailored analytical products, regular member briefings, regional events and other services. Global Business Policy Council A.T. Kearney, Inc. 8100 Boone Boulevard Suite 400 Vienna, Virginia 22182 U.S.A. 1 703 891 5500 telephone www.atkearney.com I n the two years since A.T. Kearney released its last Foreign Direct Investment Confidence Index, the global economy has faced unprecedented turmoil—a housing market collapse, a banking system teetering on the edge, rising unemployment and falling sales across almost all industries. In the 2010 FDI Confidence Index®, we examine the future prospects for international investment flows in the context of these tumultuous times. While conditions have improved, senior executives at the world’s largest companies remain wary of investing during the current climate, and few expect a full turnaround before 2011. Amid the economic downturn of the past two years, several emerging markets remain attractive to foreign investors. China, India and Brazil are in...
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...2014, the reason that developing and emerging economies have attracted FDI, and why will SDGs have a significant resource implication for future investment decisions of MNEs. 2. The recent trends discussed in the WIR 2014 1. Global FDI flows Global FDI flows increased by 9 percent in 2013 to $1.45 trillion, up from $1.33 trillion in 2012. Although the share of developed economies in total global FDI flows remained low, it is expected to rise over the next three years to 52 per cent. Global inward FDI stock rose by 9 per cent, reaching $25.5 trillion. It reflects the rise of FDI inflows and strong performance of the stock markets in many parts of the world. 2. FDI inflows FDI inflows rose 9 percent in 2013 revealed a moderate pickup in global economic growth and some large cross-border M&A transactions. The increase of FDI inflows was widespread in all major economic groupings − developed, developing, and transition economies. Developed countries’ FDI inflows grew by 9 percent, reaching $566 billion. Developing economies reached a new high of $778 billion, accounting for 54 percent of global inflows. Developing Asia remained the world’s largest recipient region of FDI flows, and China remained the recipient of the second largest flows in the world. In 2013, APEC absorbed half of global flows, similar to the G-20, while the BRICS received more than one fifth. Besides, FDI flows to Latin America and the Caribbean registered a 14 percent increase....
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...SMEs and the Internationalisation Process Giovanni Roncucci Chairman Roncucci&Partners Group April 5th 2016 Agenda Globalisation & Internationalisation Main Characteristics of the Italian System Micro, Small, and Medium Enterprises SMEs and the Italian System Italian SMEs and Internationalisation Business Plan and Budgeting Planning Roncucci & Partners 2 Globalisation & Internationalisation Roncucci & Partners 3 In the last 10-15 years the international context of the global economy changed notably. Market globalisation is one of the variables to be considered as crucial within the critical success factors of every entrepreneurial economic initiative. In this framework the challenge of internationalisation becomes a fundamental tool to sustain and strengthen the competitiveness of an economic system. Roncucci & Partners 4 Commercial Flows of Geographical Areas Table 1 - Volume of International Trade per Geographical Area and Country(a) - From 2009-2013 (price basis=2005, at percentual value) Countries & Areas 2009 2010 Export 2011 2012 2013 2009 2010 Import 2011 2012 2013 EUROPE 38,89 37,97 38,04 37,44 37,11 39,67 38,19 37,41 35,98 35,19 European Union France Germany Italy United Kingdom Spain 35,52 3,63 8,52 2,97 2,82 1,73 34,86 3,49 8,59 2,89 2,76 1,69 34,98 3,41 8,67 2,86 2,84 1,74 34,32 3,32 8,47 2,80 2,63 ...
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...3. In previous classes, we have considered issues related to FDI (foreign direct investment) in the contexts of Botswana (the joint venture with DeBeers to exploit diamond wealth) and India (SEZs as arrangements to attract FDI). One of the stated reasons Mexico joined NAFTA (North American Free Trade Agreement) was to increase its inflow of FDI. Using your research skills as necessary, has NAFTA resulted in increased FDI inflows into Mexico? If so, has the FDI increase yielded economic benefits to Mexico, specifically in the form of long-term growth? Justify your answer. Mexico’s joining NAFTA has resulted in increased levels of Foreign Direct Investment (FDI), with the World Bank estimating that levels of FDI in Mexico would be 40% lower had it not joined NAFTA (1.) While the amount of FDI flowing into Mexico increased, this was not accompanied by the expected boost to long-term economic growth. NAFTA aimed to benefit Mexico with by closing the US-Mexico wage gap, boosting job growth, fighting poverty, and protecting the environment. These goals, while honorable, have not been achieved to date. Despite NAFTA’s goal of reducing poverty in Mexico, the country experienced an increase in the percentage of people living in poverty and extreme poverty between 1994 and 1996. In contrast, both of these measures fell throughout the rest of Latin America in the same time period. While the trend of increasing poverty in Mexico was short lived, poverty measures continue to be a concern...
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...“FDI Strategy: Clean Harbors’ Entry Into Brazil” Student: Class: ITB 305 Professor: “FDI Strategy: Clean Harbors’ Entry Into Brazil” According to Clean Harbor’s website, Clean Harbors “is the leading provider of environmental, energy and industrial services throughout North America” (Clean Harbors, n.d.), located in Norwell, Massachusetts. Clean Harbors serves a multitude of entities, including several Fortune 500 companies, thousands of private firms, and scores of government offices on federal, state, and local levels. Perhaps Clean Harbor’s largest area of expertise is the management and recycling of hazardous waste produced by various industries, most notably it’s used oil recycling through its Satety-Kleen subsidiary. The company currently has substantial operations throughout North America, including the United States, Mexico, Canada, and Puerto Rico. Founded in 1980, it employs a workforce of 13,180 employees as of December 31, 2012 (Clean Harbors, n.d.). In addition to the management and recycling of hazardous waste, Clean Harbors also offers hazardous material management and disposal services including the collection, packaging, recycling, treatment and disposal of hazardous and non-hazardous waste, and a wide variety of environmental cleanup services on customer sites or other locations on a scheduled or emergency response basis (Clean Harbors, n.d.). While Clean Harbors has enjoyed success in the markets it currently operates...
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...regional integration over the last few decades. Over 40% of world trade occurs within regional integration agreements such as the European community, NAFTA, and new or expanded agreements continue to be negotiated (Wayne, 2004). A regional integration agreement represents free trade to the extent that it results in trade creation. This occurs by shifting the production of some good or product from a less efficient member country to a more efficient member country. It represents more restricted trade to the extent that it results in trade diversion by shifting the production from another efficient non-member country to a less efficient member country which promotes global business. NAFTA was thought to recast the economic landscape of North America. According to Bloomberg...
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...Cheng Vang Global Finance Argosy University Assignment M8A1 This research paper is focus on Goodyear Tire and Rubber Company (Goodyear). The objective of this research paper is to determine if Goodyear should expand to Vietnam as a Foreign Direct Investment (FDI) or not. The research will focus on these areas: 1) Goodyear Financial 2) History of Goodyear 3) Principal of Business 4) The Country Vietnam a. History b. Economy d. Trade and Balance of Payments g. Intellectual property rights h. Work forces i. Currency exchange rate 5) Conclusion Goodyear is a US based company, which is traded on the New York Stock Exchange (symbol GT). They have more than 20,000 investors and employ about 72,000 people around the world. They are one of the world’s leading tire companies and second largest tire manufacturer in Europe behind Michelin. They have 55 plants in 22 countries and operate in most regions of the world. Goodyear Tire and Rubber Company was founded by Frank A. Seiberling in 1898. During the early stages of the company, rubber and cotton were the lifeblood of the organization. The wingfoot trademark of Goodyear was not known to the public until it was first advertised in 1901. In 1905, four years after Goodyear first advertised, they emerged into a tire manufacturer leader. In 1910, Goodyear became a multi-national company when it acquired foreign plant in Bowmanville...
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...Globalization Learning objectives • Explain why it is important for managers today to have a global perspective. • Explain the three components of globalization • Describe its effects on markets and production • Explain how technology and innovation in transportation have speeded up globalization • Discuss pros and cons of globalization This chapter is dedicated to introducing the student to the emergence of a new and integrated world of business in which the traditional barriers to cross-border trade and investment including distance, time zones, language, differences in national government regulation, culture and business systems recede in significance due to globalization. The discussion of contemporary issues in international business illustrates the unique challenges of international business. A review of macro-economic and political changes that have taken place in the last 30 years highlights the issues that a typical manager must address in a global market. Information technology and technological changes have put global markets within the reach of small firms in remote locations. In spite of all its benefits, globalization is not a panacea. Critics of globalization point out that it has adverse effects on some firms and individuals. The opening case chronicles the meteoric rise of Wal-Mart from its humble Arkansas beginnings in 1962 to a global retailing giant with $218 billion in sales in 2002. The closing...
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...a long time. A definition is not easily formulated. Ordinarily the term refers to the integration of a nation of states into a larger collection. Regional integration can be described on one hand, as a vital method that requires a country’s eagerness to contribute to or unite into a larger whole. The extent of which the country shares and what the country shares establishes the level of integration. The different levels of integration are dependent on a predefined criterion. The descriptions of levels are the advantages and disadvantages of regional integration and how the stage for economic development relates to a potential business opportunity. The Advantage NAFTA The North American Free Trade Agreement (NAFTA) is an economic, international trade treaty connecting three nations that inhabit the North American continent (Canada, Mexico, and the United States) that began in 1994. NAFTA is designed to remove various trade barriers between Canada, Mexico, and the United States as well as a reduction or elimination of numerous tariffs and nontariff barriers. NAFTA is exceptional in that it has created the foremost regional integration agreement linking two highly developed countries, the United States and Canada, and a developing country, Mexico. Export opportunities have grown under NAFTA because of the tariffs elimination in 2003. The main advantage of NAFTA is that it is the world's leading free trade area, connecting more 400 billion people and producing $11 trillion worth...
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...evolve, the firm may want to disperse its value-creating activities to those markets that offer comparative advantages. If the firm is in a competitive market, it will benefit from international expansion that includes its value-creating activities because of the cost position and product differentiation opportunities such expansion can confer. A firm may be able to survive in a local market without international expansion, as long as the local market is not targeted by competitors who have taken advantage of the economies offered by dispersing their value-creation activities internationally. An example is an inefficient, high-priced locally-owned supermarket that has not yet faced the entry of Wal-Mart in its market. Q2： Were North America to adopt a common currency, it would become increasingly attractive for foreign investment and would increase trade and investment among the three countries. The exchange rates between Canada and the U.S. have been relatively stable for a long time, but that is not the case with Mexico, as the text explains. Trade and investment flows between the U.S. and...
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...domestic players need much funding for their operations and expansion. The only solution is allowing Foreign Direct Investment (FDI) in the retail sector. But, India's strict regulations against allowing FDI in retail sector prevent the entry of the foreign retailers to the country. However, with recent developments, 100% FDI is allowed in wholesale cash and carry business and many of the global retailers are finding an opportunity to enter a potential market. To reduce the risk of being in a new territory, most of the foreign companies are trying to tie up with an Indian company to start their business in India. World's largest retailer, Walmart was not left behind in the competition and decided to use the new found opportunity efficiently. It is the first foreign retail company to enter India after 100% FDI has been allowed in the wholesale sector. Partnering with India's Bharti Enterprises, a telecom giant who aims to be a business conglomerate, Walmart's entry to the subcontinent was in style. However, the biggest retailer Walmart's entry to the wholesale business, a completely different game from its favorite retail and Bharti's lack of experience is of course, a matter of concern. This case study would help in analyzing the attempts of foreign retailers to enter the land of opportunities through different strategies, even when regulations regarding FDI restrict their moves. Apart from that the case gives an overview of the two partners, Bharti Enterprises and Walmart. Analyzing...
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