Amity Business School

Amity Business School
MBA 2013, 3rd Semester

INTERNATIONAL ECONOMICS AND POLICY

Amanpreet Kang

1

Macmillan 3. Samuelson & Nordhaus (18th Edition). Pearson Education 4.Amity Business School References 1. Mc Graw Hill 2. Tata Mc Graw Hill 2 . International Economics. International Economics. Francis Cherunilam (4th Edition). BO Sodersten and Geoffrey Reed (3rd Edition). International Economics. Economics. Paul Krugman and Maurice Obstfeld (6th Edition).

Promote regionalism at the expense of multilateralism. Help to achieve greater integration at regional level 2. Reduce the costs of trade by harmonizing regulations and standards 4. RIAs should be conceived and developed in a manner that finally leads to multilateral liberalization. Increase credibility of reform initiatives and strengthen security arrangements between partners 5. Help governments to test the benefits of free trade Disadvantages: 1. Positive production and consumption effects 3.Amity Business School Benefits and Disadvantages of RIAs Benefits: 1. 3 .

RIAs should be conceived and developed in a manner that finally leads to multilateral liberalization. • Regional agreements provide varying levels of protection against external parties and lead to trade diversion and application of rules of origin and differing standards. This makes international trade more complex and costly. • Affect internal dynamics of trade liberalization in a political economy sense (RTAs exclude difficult sectors from coverage) • These tend to distract attention and energy from multilateral negotiations 4 .Amity Business School Benefits and Disadvantages of RIAs Disadvantages: • Promote regionalism at the expense of multilateralism. • Increasing number of RIAs risk transparency of trading rules posing threat to world trade.

Farmers are paid the same price for their produce. In 1962. Germany. EU countries stopped charging custom duties when they trade with each other. or „Common Market‟. the Treaty of Rome creates the European Economic Community (EEC).Amity Business School European Union • The European Union was set up with the aim of ending the frequent wars between neighbors. Founders: Belgium. The EU started its „common agricultural policy‟ giving the countries joint control over food production. Luxembourg. In 1957. Italy. Netherlands. the European Coal and Steel Community started uniting European countries economically and politically. Resulted in surplus in 1990‟s 5 • • • • . In 1950. France.

Malta. Czech Republic. Finland and Sweden in 1995. Greece in 1981. people and money. Poland. Austria. In 1993 Single Market completed with 'four freedoms' of: movement of goods. Lithuania. Hungary. Cyprus.Amity Business School European Union • Members: Denmark. UK and Ireland joined in 1973. Slovenia and Slovakia joined in 2004 and some countries of Eastern Europe later In 1987 the Single European Act is signed to sort out problems with the free-flow of trade across EU borders and created „Single Market‟. Latvia. services. Estonia. „Maastricht‟ Treaty on European Union in 1993 and Treaty of Amsterdam in 1999. • • 6 . Portugal.

efficient and transparent.Amity Business School European Union • • Euro launched in 2002. It is designed to make the EU more democratic. and constitution of EU in 2004 The 27 EU countries sign the Treaty of Lisbon. which amends the previous Treaties. Initial objective: to co-operate and stop war between countries and currently focus is on transition economies and democracy. countries of east and west Europe Type: Economic and Monetary Union 7 . Institutions: provided as a note (check Amizone) Members: 27 (in 2007).

Since NAFTA came into effect. job creation. Entered into force on January 1. North American businesses. trade and investment levels in North America have increased. Mexico and Canada Type: Free Trade Area North-South co-operation The North American Free Trade Agreement (NAFTA) is trade agreement that sets the rules of trade and investment between Canada. and Mexico. workers. and farmers have all benefited.Amity Business School NAFTA • • • • Countries: USA. 1994. the United States. consumers. and better prices and selection in consumer goods. 8 • • . families. NAFTA and has eliminated most tariff and non-tariff barriers to free trade and investment between the three NAFTA countries. bringing strong economic growth.

• The exporter must complete a certificate of origin 9 . Rules of Origin: • Tariffs foregone on imported goods “originating” in the other NAFTA countries. • They ensure that NAFTA‟s benefits are not extended to goods imported from non-NAFTA countries that have undergone only minimal processing in North America. over 15 years.Amity Business School NAFTA When implemented. • Rules of origin help deciding which goods qualify for PTA under NAFTA. of most remaining barriers to cross-border investment and to the movement of goods and services between the three countries. NAFTA immediately lifted tariffs on the majority of goods produced by the NAFTA partners and there was phased elimination.

reaching US$946. has more than quadrupled. Canada and the United States‟ inward FDI from NAFTA partner countries reached US$469. trade has nearly tripled. representing a net gain of 39.S. and Mexico surpassed US$17 trillion in 2008.S.1 billion in 2008. Mexico has become one of the largest recipients of FDI among emerging markets. North American employment levels have climbed nearly 23% since 1993.6 trillion in 1993. The combined gross domestic product (GDP) for Canada. North American economy has more than doubled in size. In 2008. Canada-U.8 billion. up from US$7. while trade between Mexico and the U.Amity Business School NAFTA • • Merchandise trade among the NAFTA partners has more than tripled. • • • • • 10 . the United States.7 million jobs. and received US$156 billion from its partners between 1993 and 2008.

has more than quadrupled. and received US$156 billion from its partners between 1993 and 2008. Mexico has become one of the largest recipients of FDI among emerging markets.8 billion. reaching US$946.Amity Business School NAFTA • • Merchandise trade among the NAFTA partners has more than tripled.1 billion in 2008. Canada and the United States‟ inward FDI from NAFTA partner countries reached US$469. In 2008.7 million jobs. The combined gross domestic product (GDP) for Canada. the United States. up from US$7.6 trillion in 1993.S. North American employment levels have climbed nearly 23% since 1993. North American economy has more than doubled in size. trade has nearly tripled. and Mexico surpassed US$17 trillion in 2008. while trade between Mexico and the U. • • • • • 11 .S. Canada-U. representing a net gain of 39.

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