regional integration

Which benefits can Regional Integration provide to countries? : 

Which benefits can Regional Integration provide to countries?

Group members: : 

Group members: Murad Mirzayev Orxan Osmanov Elnur Allahverdiyev Aslan Maharramli Regional Integration Spring 2008

Objectives: : 

Objectives: Regional Integration Spring 2008 What is Regional Integration (RI)? Stages of Economic Integration Integrated economies: EU, NAFTA, ASEAN, MERCOSUR. Benefits of RI Conclusion

Regional Integration : 

Regional Integration remove barriers increase the movement of people, labor, goods, capital among nations Reducing possibility of regional armed conflict Adopting cohesive regional stances on policy issues Regional Integration Spring 2008

Stages of Economic Integration : 

Stages of Economic Integration Free-Trade Area Customs Union Common Market Economic Union Political Union Regional Integration Spring 2008

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Free trade area All barriers to trade of goods/services are removed Each country allowed to determine non-member policy Customs Union Eliminates trade barriers between member countries Adopts common external trade policy Common Market No barriers to trade among member countries Common external trade policy Allows factors of production to mover freely among members Economic Union Free flow of products & factors of production Adoption of common external trade policy Requires common currency, common monetary & fiscal policy Political Union Central political apparatus coordinates economic, social & foreign policy of members Regional Integration Spring 2008

Integrated Economies - European Union : 

Integrated Economies - European Union Regional Integration Spring 2008 The EU was founded in 1957 under the Treaty of Rome by France, Germany, Italy and the Benelux nations. European Union : Product of 2 political factors Devastation of 2 World Wars & desire for peace Desire to hold their own on the world’s political and economic stage The aims: Prevention of future war Creating “an ever closer union between the peoples of Europe” Encouraging economic corporations and developing

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European Union - Treaties Treaty of Rome Maastricht Treaty Amsterdam Treaty Treaty of Nice Lisbon Treaty Regional Integration Spring 2008

Integrated Economies - NAFTA : 

Integrated Economies - NAFTA North American Free Trade Agreement 1989 US & Canada – 1994 & Mexico Remove tariffs on 99% of goods in 10 years Removal of barriers to cross-border flow of services Protection of intellectual property rights Removal of most restrictions on FDI Application of national environmental standards (scientific basis) Establishment of 2 commissions Monitor environmental standards & health/safety, minimum wage or child labor laws Impose fines & remove trade privileges for violations Regional Integration Spring 2008

Integrated Economies - ASEAN : 

Integrated Economies - ASEAN Association of Southeast Asian Nations 1967 – Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand & Vietnam 500 million people & GDP $740 billion Foster free trade & cooperate in industrial policies The ASEAN Single Aviation Market (SAM) Regional Integration Spring 2008

Integrated Economies : 

Integrated Economies Republic of Azerbaijan is a member of GUAM and CIS. Regional Integration Spring 2008

Pre-Conditions for successful RI : 

Pre-Conditions for successful RI Political Domestic peace/security in countries Political and civic commitment and mutual trust among countries Economic Stabilize: Minimum threshold of macroeconomic and financial management in countries (price stability, realistic real exchange rates) Sufficiently broad national reforms to open markets Regional Integration Spring 2008

Key Principles for Successful RI : 

Key Principles for Successful RI Openness: National and regional markets too small: openness to the rest of the world essential Subsidiarity: Regional organization should do only what national governments cannot do as well Private sector leadership: Integration must be for the people; private sector is the engine of integration Pragmatism: Variable geometry (countries join when they are ready and appropriate); variable speed (not all issues simultaneously); variable depth (degree of supranationality) Regional Integration Spring 2008

Benefits of Regional Integration : 

Benefits of Regional Integration Trade Creation Greater Consensus Political Cooperation Employment Opportunities Regional Integration Spring 2008

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Trade Creation Increase in the level of trade between nations that results from regional integration. Greater Consensus Eliminate trade barriers in smaller groups of countries is that easier get consensus. Political Cooperation Some countries have greater political weight, so they can more negotiate with other countries. And can reduce military conflict. Employment Opportunities Regional Integration can expand employment opportunities by enabling people to move from one country to another to find work. Regional Integration Spring 2008

Conclusion : 

Conclusion Because of the benefits of Regional Integration are greater than the costs, regional integrations acceptable for countries. Expands trade among nations Reduces unemployment Military conflict among nations declines Flows of FDI increase among countries Regional Integration Spring 2008

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THANKS Regional Integration Spring 2008