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38 Cards in this Set
- Front
- Back
Common market
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a stage of regional integration in which trade barriers are reduced or removed, common external barriers are established, and products, services, and factors of production are allowed to move freely among the member countries
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Customs union
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a stage of regional integration in which the member counties agree to adopt common tarrff and nontarriff barriers on imports from nonmember countries
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Economic union
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a stage of regional integration in which member countries enjoy all the advantages of early stages, but also strive to have common fiscal and monetary policies
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Free trade agreement
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a formal arrangement between two or more countries to reduce or eliminate tarriffs, quoteas, and barriers to trade in products and services
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Free trade area
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a stage of regional integration in which member countries agree to eliminate tarriffs and other barriers to trade products and services within the bloc
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regional economic integration
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the growing economic interdependence that results when two or more countries within a geographic region form an alliance aimed at reducing barriers to trade and investment
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regional economic integration bloc
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a geographic area consisting of two or more countries that have agreed to persue economic integration by reducing barriers to the cross-border flow of products, services, capital, and, in more advanced states, labor
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political union
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represents the ultimate degree of interegration among countries
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european union
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the momst advanced economic integration agreement
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NAFTA, MERCOSUR
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examples of economic blocs
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Regional integration
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contributes to corporate and industrial growthm and hence to economic growth, better living standards, and higher tax revenues for the member countries. It also increases competition and economic dynamism within the bloc, and increases the bloc's politicacl power
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The most successful blocs
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most successful consist of countries that are similar in terms of culture, language, and economic political structures, and close geographically
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trade creation
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new trade is generated among the countries inside the bloc
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trade diversion
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member countries discontinue some trade with countries outside the bloc
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Regional inegration
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can reduce global freetrade, particularly when member countries form a customs unionthat results in substantial trade barriers to countries outside the bloc. It results in economic restructuring, which harm particular industries and firms
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monetary union
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a single currency (the euro) is in circulation
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factors of production
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capital, labor and technology
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market access
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tarriffs and most nontarriff barriers have been eliminated for trade in products and services, and rules of origin favor manufacturing that uses parts and other inputs used in the EU
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common market
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The EU removed barriers to the cross-national movement of production fators
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trade rules
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member countries have largely eliminated customs procedures and regulations, which streamlines transportation and logistics
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Standards harmonization
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The EU is harmonizing technical standards, regulations, and enforcement procedures that relate to products, services, and commercial activities
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interprets and enforces EU laws and settles legal disputes between member states
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European court of justice
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Regional products and marketing strategy
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regional intergration can stimulate companies to standardize teir products and services
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purchasing power parity
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the per capita GDP figures have been adjusted for price differences
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economic similarity
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the more similar the economies of the member countries, the more likely the economic bloc will succeed
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political similarity
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similarity in political systems ehances prospects fpr a successul bloc. Countries that seek to integrate regionally should share similar aspirations and a willingness to surrender national autonomy for the larger goals of the proposed union
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similarity of culture and language
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cultural and linguistic similariy among the countries in an economic bloc provies the basis for mutual understanding and cooperation
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geographic proximity
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most economic blocs are formed by countries within the same geographic region because it facilitates transportation of products, labor etc
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trade diversion
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once a bloc is in place, member countries will discontinue some trade woth nonmember countries. The aggregate effect is that national patterns of trade are altered- more trade takes place inside the bloc, and less trade takes place with countries outside the bloc
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reduced global free trade
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gives rise to two opposing tendencies. A country that reduces trade barriers is movin gtoward free trade. An economic bloc that imposes external trade barriers is moving away from the worldwide free trade
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Loss of national identity
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when nations join together in an economic bloc, increased cross-border contact has a homogenizing effect; the members become more similar to each other and national cultural identity can be diluted
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sacrifice of autonomy
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later stages of regional integration require member countries to establish a central authority in order to manage the blocs affairs. Each participating country must sacrafice to the central authority some of t autonomy.
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transfer of power to advantaged firms
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regional integration can concentrate economic power in the hands of fewer, more advantaged firms
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corporate restructuring and job loss
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many firms restructure to meet the competitive challenges posed in the new, enlarged marketplace of regional integration
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rationalization of operations
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following the creation of an economic bloc, the importance of national boundaries will decrease. Firms begin to view the bloc as a unified whole
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Rationalization
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the process of restructuring and consolidating company operations that managers often undertake following regional integration
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mergers and acquisitions
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the tendency of one firm to buy another or of two or more firms to merge and form a larger company
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internalization by firms from outside the bloc
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foreign firms tend to avoid exporting as an entry strategy because economic blocs erect trade barriers against imports from outside the bloc
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