Global business refers to production as well as to markets. These contain transactions that are developed and implemented across worldwide borders in order to meet set objectives. Some transactions include import, export, and foreign direct investment (FDI). This paper will analyze the role of regional integration in promoting global business. The geographical region of the United States will be the area of focus and will discuss the advantages and disadvantages of the North American Free Trade Agreement (NAFTA) on regional integration. Lastly, this paper will compare and contrast the economic development stages of the countries within this region and the ramifications of economic development for global business.
Analysis of Regional IntegrationRegional integration is an agreement between countries within a specific geographical region to reduce and remove tariff and non-tariff barriers (Hill, 2004). By removing these barriers allows organizations to better support the flow of goods and services. Regional integration has promoted and encouraged positive relationships between countries within specific regions.
Each region establishes it own set of guidelines concerning its members. Hill gives the example (2004), "tariffs placed on the products of nonmember countries may vary from member to member" (p. 269-270). The most important aspect of regional integration is the ability to help strengthen economic as well as social and cultural ties between countries.
Advantages and DisadvantagesAs with any business dealing there are advantages and disadvantages to regional integration. The biggest advantage of regional integration is the ability to establish and maintain free open trade within specific regions. Free trade promotes economic growth opportunities, produces jobs, and offers more opportunities for growth and investments. The effect of lowering trade barriers reduces costs of producing products, which in turn reduces the price of the products and services sold. Regional integration allows for the countries entering into the agreement a larger...