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Unit VI Regional Economic Integration for International Business MCOM sem 2 Delhi University

Unit VI Regional Economic Integration for International Business MCOM sem 2 Delhi University

There are four main types of regional economic integration. Free trade area. This is the most basic form of economic cooperation. Member countries remove all barriers to trade between themselves but are free to independently determine trade policies with nonmember nations.Unit VI Regional Economic Integration for International Business MCOM sem 2 Delhi University.

Regional economic integration refers to efforts to promote free and fair trade on aregional basis. … Member countries remove all barriers to trade between themselves, but are free to independently determine trade policies with nonmember nations. Customs union provides for economic cooperation.

Regional Economic Integration for International Business MCOM sem 2 Delhi University

Regional Economic Integration for International Business MCOM sem 2 Delhi University

Economic integration is an economic arrangement between different regions, marked by the reduction or elimination of trade barriers and the coordination of monetary and fiscal policies.

Regional Integration is a process in which neighboring states enter into an agreement in order to upgrade cooperation through common institutions and rules. The objectives of the agreement could range from economic to political to environmental, although it has typically taken the form of a political economy initiative where commercial interests are the focus for achieving broader socio-political and security objectives, as defined by national governments. Regional integration has been organized either via supranational institutional structures or through intergovernmental decision-making, or a combination of both. Unit VI Regional Economic Integration for International Business MCOM sem 2 Delhi University.

Past efforts at regional integration have often focused on removing barriers to free trade in the region, increasing the free movement of people, labour, goods, and capital across national borders, reducing the possibility of regional armed conflict (for example, through Confidence and Security-Building Measures), and adopting cohesive regional stances on policy issues, such as the environment, climate change and migration. Unit VI Regional Economic Integration for International Business MCOM sem 2 Delhi University.

Intra-regional trade refers to trade which focuses on economic exchange primarily between countries of the same region or economic zone. In recent years countries within economic-trade regimes such asASEAN in Southeast Asia for example have increased the level of trade and commodity exchange between themselves which reduces the inflation and tariff barriers associated with foreign marketsresulting in growing prosperity. Unit VI Regional Economic Integration for International Business MCOM sem 2 Delhi University.

Regional integration has been defined as the process through which national states “voluntarily mingle, merge and mix with their neighbors so as to lose the factual attributes of sovereignty while acquiring new techniques for resolving conflicts among themselves.”De Lombaerde and Van Langenhove describe it as a worldwide phenomenon of territorial systems that increases the interactions between their components and creates new forms of organization, co-existing with traditional forms of state-led organisation at the national level. Some scholars see regional integration simply as the process by which states within a particular region increase their level of interaction with regard to economic, security, political, or social and cultural issues.

In short, regional integration is the joining of individual states within a region into a larger whole. The degree of integration depends upon the willingness and commitment of independent sovereign states to share their sovereignty. Deep integration that focuses on regulating the business environment in a more general sense is faced with many difficulties. Unit VI Regional Economic Integration for International Business MCOM sem 2 Delhi University.

Unit VI Regional Economic Integration for International Business MCOM sem 2 Delhi University

Regional integration initiatives, according to Van Langenhove, should fulfil at least eight important functions:

  • the strengthening of trade integration in the region
  • the creation of an appropriate enabling environment for private sector development
  • the development of infrastructure programmes in support of economic growth and regional integration
  • the development of strong public sector institutions and good governance;
  • the reduction of social exclusion and the development of an inclusive civil society
  • contribution to peace and security in the region
  • the building of environment programmes at the regional level
  • the strengthening of the region’s interaction with other regions of the world.

The crisis of the post-war order led to the emergence of a new global political structure. This new global political structure made obsolete the classical Westphalian concept of a system of sovereign states to conceptualise world politics.[citation needed] The concept of sovereignty became looser and the old legal definitions of the ultimate and fully autonomous power of a nation-state are no longer meaningful.[citation needed] Sovereignty, which gained meaning as an affirmation of cultural identity, has lost meaning as power over the economy.[citation needed] All regional integration projects during the Cold War were built on the Westphalian state system and were designed to serve economic growth as well as security motives in their assistance to state building goals.[citation needed] Regional integration andglobalisation are two phenomena that have challenged the pre-existing global order based upon sovereign states since the beginning of the twenty-first century. The two processes deeply affect the stability of the Westphalian state system, thus contributing to both disorder and a new global order. Unit VI Regional Economic Integration for International Business MCOM sem 2 Delhi University.

Regional integration agreements

Regional integration agreements (RIAs) have led to major developments in international relations between and among many countries, specifically increases in international trade and investment and in the formation of regional trading blocs. As fundamental to the multi-faceted process of globalization, regional integration has been a major development in the international relations of recent years. As such, Regional Integration Agreements has gained high importance. Not only are almost all the industrial nations part of such agreements, but also a huge number of developing nations too are a part of at least one, and in cases, more than one such agreement.

The amount of trade that takes place within the scope of such agreements is about 35%, which accounts to more than one-third of the trade in the world.The main objective of these agreements is to reduce trade barriers among those nations concerned, but the structure may vary from one agreement to another. The removal of the trade barriers or liberalization of many economies has had multiple impacts, in some cases increasing Gross domestic product (GDP), but also resulting in greater global inequality, concentration of wealth and an increasing frequency and intensity of economic crises. Unit VI Regional Economic Integration for International Business MCOM sem 2 Delhi University.

The number of agreements agreed under the rules of the GATT and the WTO and signed in each year has dramatically increased since the 1990s. There were 194 agreements ratified in 1999 and it contained 94 agreements form the early 1990s.

The last few years have experienced huge qualitative as well as quantitative changes in the agreements related to the Regional Integration Scheme. The top three major changes were the following:

  • Deep Integration Recognition
  • Closed regionalism to open model
  • Advent of trade blocs

Deep Integration Recognition

Deep Integration Recognition analyses the aspect that effective integration is a much broader aspect, surpassing the idea that reducing tariffs, quotas and barriers will provide effective solutions. Rather, it recognizes the concept that additional barriers tend to segment the markets. That impedes the free flow of goods and services, along with ideas and investments. Hence, it is now recognized that the current framework of traditional trade policies are not adequate enough to tackle these barriers. Such deep-integration was first implemented in the Single Market Program in the European Union. However, in the light of the modern context, that debate is being propounded into the clauses of different regional integration agreements arising out of increase in international trade. Unit VI Regional Economic Integration for International Business MCOM sem 2 Delhi University.

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