in the international spotlight india
Final exam questions – International Business_Fall 2013 (18.01.2014)
1. What are the economic and political arguments for regional economic integration and impediments to integration? Describe each argument and impediment shortly.
The economic and political arguments for Regional Economic Integration are trade diversion and geography. This would exclude third world countries from being exposed to trade tariffs in the international market. Other than that because of being close to each other, the trade costs will fall and the prices of the traded products will also be lower. Impediments are costs, painful adjustments, and concerns over national sovereignty.
2. Describe the opportunities and threats of Regional Economic Integrations for Multinational Enterprises. Give examples.
Opportunities
• Formerly protected markets are now open to exports and direct investment
• Because of the free movement of goods across borders, the harmonization of product standards, and the simplification of tax regimes, firms can realize potentially enormous cost economies by centralizing production in those locations where the mix of factor costs and skills is optimal
Threats
• Lower trade and investment barriers could lead to increased price competition within the EU and NAFTA
• Increased competition within the EU is forcing EU firms to become more efficient, and stronger global competitors
• Firms outside the blocs risk being shut out of the single market by the creation of a “trade fortress”
• Firms may be limited in their ability to pursue the strategy of their choice in the EU intervenes and imposes conditions on companies proposing mergers and acquisitions
3. Describe the advantages and costs of introduction of single currency in Regional economic integrations.
Benefits
• Firms and individuals should save by handling one currency, rather than many
• Consumers should find it easier to compare prices across Europe
• Producers should become more efficient as
1. What are the economic and political arguments for regional economic integration and impediments to integration? Describe each argument and impediment shortly.
The economic and political arguments for Regional Economic Integration are trade diversion and geography. This would exclude third world countries from being exposed to trade tariffs in the international market. Other than that because of being close to each other, the trade costs will fall and the prices of the traded products will also be lower. Impediments are costs, painful adjustments, and concerns over national sovereignty.
2. Describe the opportunities and threats of Regional Economic Integrations for Multinational Enterprises. Give examples.
Opportunities
• Formerly protected markets are now open to exports and direct investment
• Because of the free movement of goods across borders, the harmonization of product standards, and the simplification of tax regimes, firms can realize potentially enormous cost economies by centralizing production in those locations where the mix of factor costs and skills is optimal
Threats
• Lower trade and investment barriers could lead to increased price competition within the EU and NAFTA
• Increased competition within the EU is forcing EU firms to become more efficient, and stronger global competitors
• Firms outside the blocs risk being shut out of the single market by the creation of a “trade fortress”
• Firms may be limited in their ability to pursue the strategy of their choice in the EU intervenes and imposes conditions on companies proposing mergers and acquisitions
3. Describe the advantages and costs of introduction of single currency in Regional economic integrations.
Benefits
• Firms and individuals should save by handling one currency, rather than many
• Consumers should find it easier to compare prices across Europe
• Producers should become more efficient as