Country Risk and Strategic Planning Analysis Paper

Week Two Assignment

Mike McMurtry

University of Phoenix

MGT/448

Global Business Strategies  

Regional Integration For and Against Articles

Group # ON09BSM06B

 Dr. Gasiorowska

August 4, 2009

Describe the advantages and disadvantages of regional integration and relate the stage of economic development of the economically integrated region to potential business opportunities. 

In favor of Regional integration 

Regional integration has several advantages. For instance each country in the region will experience increased trade. This will bring about increases in income and the region will prosper. Producers in the region are now able to extract increased returns to scale and are able to compete on better terms globally. Regional integration is beneficial because it has a potential of attracting direct foreign investment from within the region as well as becoming more attractive for foreign direct investment from abroad. Furthermore, there can be a closer coordination among industries within the region leading to increased competitiveness as well as greater bargaining power in global markets. Regional integration increases business and trade relations among the member countries and this will lead to greater trust and security among the trading partners. 

The area selected for discussion is NAFTA. This Regional integration has become so successful that it has turned into the largest free trade area. NAFTA has produced $15.3 trillion in goods and services and connects 439 million people. An advantage to the USA is that NAFTA has increased the annual GDP of the USA by more than 5 percent. Also, Mexico has experienced increases in high business growth rates, investments, and trade. Exports from Canada and Mexico grew by an extraordinary 231 percent between the years of 1993 and 2007. NAFTA allows its member countries to bid for government contracts within its member countries.

There are several advantages of NAFTA. On one side...