The paper "Regionalism and Multilateralism in the World Organization" is a brilliant example of a term paper on marketing. Pursuant to the post-1990 quest for regionalism, there has been mushrooming need for regional integration which is per se a prerequisite for effective competition. As a result, many countries from different economic and structural backgrounds are able to come together and pool resources towards economic sustenance. Part ONE: Reasons for the formulation of trade unions e. g. NAFTA and EU New markets and trade opportunities Regionalism by definition refers to an increase in the intra-regional trade flows, the number of RTA s itself notwithstanding.
This essentially helps expand the foreign market. A Regional Trade Agreement opens up new market opportunity through the process of trade creation (this refers to the increase of the level of trade between the member countries at the expense of domestic producers) Promote foreign direct investments Foreign Direct Investment is an important ingredient in the thriving global business. Through Foreign direct investment, a trading partner is able to open up new marketing channels, access state of the art technology and get cheaper production facilities, these factors work together to create a strong impetus for further business thrive. External trade liberalization and capital market liberalization Regional Trade Agreement is perceived as a provision of underpinnings to a strategic alliance that will automatically translate into security provisions.
By security here we mean economic security. Smaller countries will perceive any alliance with a grand market economy whether regional or multilateral as a source of economic security. Strengthening Domestic Policy Reforms Some countries perceive regionalism as a designed arrangement to lock in domestic policy reform making them secure. The security herein refers to binding the country to the master head of an international trade treaty; meaning that there are no chances of a future reversal of the domestic policy.
For instance, in NAFTA, Mexico’ s central preoccupation in the RTA is to establish a stable economic base through the domestic policy reform agenda. This is however bound to render the whole process asymmetric wherein the stable market economy is bound to use this tool for non-trade purposes, thereby thwarting the economic ambitions of the infant economy. The domestic policy reforms together with market liberalization help enhance regional growth economically.
Some countries enter the regional trade agreements with tactical consideration. With the prior quest for multilateralism, some countries form regional trade agreements as a springboard for subsequent multilateral negotiations. Increased multilateral bargaining power Pursuant to the quest to have higher bargaining power in the global or multinational economy, countries adopt regionalism as the password to the big market. This gives a country an upper negotiating power with external barriers thus through a CU instead of an FTA.