Regional economic cooperation has positive prospects because of the employment opportunities, investment and increase in the trade which will increase the economic activity across the borders.
Q: 1: Levels of
integration among the Asian countries.
Freed trade: The first and the most important
reason for RECA is the free trade, they mean by free trade that there should
not be any barriers created intentionally for the sake of reducing the trade
benefits of the countries through imposing the unnecessary tariffs, quotas and
subsides. As the U.S did with the china. When U.S citizens were consuming the
more products of the China, for that U.S was importing the more products from
the china. Now for reducing the imports from the China, U.S government started
to impose the more tariffs on the Chinese products that is called as the
discretionary tariffs imposed by the U.S in order to reduce the consumption of
the Chinese products.
Common markets: The next level of RECA integration
is that there should be common market which allows the countries to freely move
the factors of the productions across the borders for the member countries like
labor and capital without any restrictions. For this countries need to be
cooperative for policy making so as to meet the demands of the common market.
Economic Union: Economic
union allows for the free trade of the products and the factors of the
production between the integrated members. For creating the common demand,
countries need to adopt the external trade policy and there should also be the
same currency of the member countries. Furthermore there policies regarding the
taxes and monetary and fiscal policy should be harmonized.
Custom union: This union is for the elimination of
the trade barriers and for creating the common external trade policy.
Political Union: there is also the political union in the
integration of the member countries in which the representative political party
coordinates and oversee the economic, social and foreign policy of the member
countries.
Q: 2: understanding the
economic and political arguments against regional economic integration.
Political integration: As I already mentioned because in
this global world countries are dependent on each other and because every
country cannot produce all of the things efficiently which it wants, so it must
have to depend on the other countries as well. In order reduce the cost production,
so every country cannot be specialized in producing the particular product, it
must have to buy it from the specialized country. So, because countries depend
on each other they need to create the political cooperation and it will reduce
their political conflicts and violations which will strengthen their overall
relations that can be seen in the Pakistan and China relations. As Pakistan and
china are also dependent on the each other’s products (fact that Pakistan is
more dependent on the China) because they import and export the products to
each other. Because they know that they depend on each other and they cannot
maintain their good relations without creating the good political relations,
for that both have created a good political relationship.
When there are political
relations created, political bodies should not be creating the barriers for the
sake of their own benefits and if they create barriers, this means that there
trade relationships with the other countries would not remain good because no
country would like to trade with the country who is not cooperative enough.
Political relations are the main relations for the foreign policy, and foreign
policy is the main for creating the trade relations if you have a good
relations with the country, this means most probably you have good trade
relations as well.
So as with the
regional economic cooperation in the Asia there was a time when Pakistan had
more good relation with India, at that time it had also good trading relations
with it, but if we consider it today, Pakistan and India have worst relation
ever had, and now Pakistan has also reduced its trade relations with India, take
the example of the reduction in the tomato import. So we can understand from
this that good trading relations are positively related with the good political
relations
Economic integration: As I discussed if there is a free
trade in the countries, then countries would prefer producing the specialized
goods rather than producing the goods in which countries have less efficiency
because it would require the more resources compared to producing the
specialized goods.
In result of producing the specialized goods, there would be
higher production overall in the world and lower cost because countries would
be producing the only goods in the bulk in which they are specialized and this
would lead to the economy of the scale and finally lower cost. Furthermore, economic
integration with respective to free trade leads to the economic growth and
increased GDP.
Q: 3: Explain the
history, current scope and future prospects of the worlds’ most important
regional economic arguments.
History: Before the world economic integration,
each country used to produce all of the goods itself, whether it was
specialized or not in producing the particular good. Due to which countries
used produce all the goods by assigning available resources according to the
need of the production of the particular good. Due to all this process
countries used to have the high costs and less production and ultimately higher
prices that consumers used to pay for the goods. But after the evolution, when
there was a regional economic integration countries started selling the
products across the borders through making the trade agreements, which helped
them in producing the only specialized goods which lowered the cost of
production and increased the overall production that lead to reduce in the
prices of the goods.
Current: Due to the rise in the tariffs and
rapid increase and decrease of global trade tensions has created the
uncertainty in the policy. Decrease in the investment has reduced the growth of
the global trade by 0.3 percent in 2019. And it is said as lowest level in the
decade.
Bilateral trade between America and the China has decreased a
lot, leaving a significant impact on the international supply chain. As we know
America increased the tariffs on the goods imported from the China because the
U.S consumers were preferring to the Chinese products because of the low cost
and high quality and same did the China with the U.S in response to it, and
increased the tariffs on the goods imported from the U.S. Due to the increased
tariffs consumers were less likely buying the imported goods, which ultimately
resulted decrease in the trade between the China and America. This occurred
because of the discriminatory tariffs and quotas. Furthermore, electronic and
automobile sectors which were operating across the borders have been hit hard.
Many of the less developed countries have saw the rise in their exports to the
various countries because they remain unaffected from the trade disputes.
Future: in this corona virus period of high
uncertainty the growths of the companies are declining a lot that is really aligned with the increase in
the trade barriers like high tariffs and quotes which will lead to the decrease
in the trade across the borders as well
decrease in the manufacturing activity. This is going to change the overall
policies of the countries. Furthermore, there would be huge decrease in the
demand, in result this will reduce the prices of the goods. From all this we
can understand that the current situation has a very serious consequences for the
future. As the overall production decrease, it will have the huge impact on the
overall world GDP and income because the overall trade and the flow of goods
decrease, which would ultimately reduce the circulation of the money. From this
we can see the overall integration of the countries in terms of the trade which
will be disturbed a lot.
Q: 4: Explain the
implications for the management practices that are in regional economic
integration agreement
There are the varying implications for the management according
to the situations in the integrated countries. Take the example of the corona
virus, as we know virus started from the china (Vohan city). When it spread in
all parts of the china, countries all over the world stopped importing from the
china, even the regionally integrated countries stopped importing from the
china. As china is the major exporter of the most of the goods consumed in the
world, so this is a one situation in which implications for the management of
the countries who are regionally integrated with the china are like they can
increase their production of those goods that china used to produce and export
them to the countries who used to import from the china, this is advantage to
these countries and disadvantage to china(because countries are no more
importing from china because virus may come to these countries from china) and
china should decrease the production in order to reduce the cost of the wastage
and obsolete. As the world is in the fear of importing goods from the china that
may bring virus to them by keeping this in consideration china should reduce
the everything related to the production like supplies, cutting off the
employees in order to reduce the cost of wages, and if china does not do so it
may face the huge losses that may have the very serious concerns for the future
as well.
When there is regional
integration among the countries other
implication for the management is that they should produce the only goods in
which they are specialized and this will lower the cost of the production and
there will also be more goods available in the world at the cheaper cost because of the economies of
the scale, because if they produce the goods in which they are not specialized,
there cost will increase and that will increase the price of the goods and
would create pressure on the consumers.