Global Linkages - PowerPoint PPT Presentation

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Global Linkages

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Free Trade Area. Customs Union. Common Market. Economic Union. Effects on trade and FDI patterns ... and Investment Patterns. FDI. Trade. Free Trade Area. 20 ... – PowerPoint PPT presentation

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Title: Global Linkages


1
Global Linkages
Management Linkages
Country A
Country B
Policy Linkages
Trade and Investment Linkages
2
Global Linkages
Management Linkages
Country B
Country A
Integration
Trade and Investment Linkages
3
Regionalization of Economic Activity
  • Levels of Economic Integration
  • Free Trade Area
  • Customs Union
  • Common Market
  • Economic Union
  • Effects on trade and FDI patterns
  • Evolution toward worldwide integration
  • Impact on management of MNCs

4
Trade and Investment in Isolation
Prevailing Tariff Levels and Investment Patterns
FDI
20
Trade
10
33
40
100
5
Free Trade Area
Consequences External Tariffs? Trade
Creation? Trade Diversion? Regional content?
Export jobs?
20
  • No tariffs among members
  • Tariffs with non-members unchanged

33
100
6
Trade and Investment in Isolation
Imports
33
40
Cheapest Producer
7
Trade Creation from FTA Formation
33
Imports
Cheapest Producer
8
Trade and Investment in Isolation
Cheapest Producer
Imports
33
40
9
Trade Diversion from FTA Formation
Cheapest Producer
33
Imports
10
Customs Union
  • FTA plus...
  • Common tariff policy for non-members

33
33
33
11
Common Market
No Non-Tariff Barriers
  • Customs Union plus...
  • Reduction of non-tariff barriers among members

Shift in International Strategy
12
EC Single European Act
  • Free Movement of Goods
  • Abolish border controls
  • Reduce state subsidies to industries
  • Mutual recognition of technical standards
  • Free Movement of Services
  • Mutual recognition of regulatory standards
  • Increase competition for public procurement
  • Harmonize regulation in telecom and
    transportation industries

13
EC Single European Act
  • Free Movement of Capital
  • Abolish exchange controls
  • Allow cross border securities trading
  • Cross border banking
  • Initiation of ECU denominated financial
    instruments
  • Free Movement of Labor
  • Abolish border checks
  • Mutual recognition of skills, education
  • Common immigration policy

14
Common Market
National Currencies
  • Consequences
  • Strain on F/X rates
  • tax rates?
  • growth?
  • trade?

ÖS

DM
FF
DkK
15
Economic Union
  • Common Market plus...
  • Single currency
  • Harmonization of Monetary and Fiscal Policies

16
Multilateralism in Trade and Investment Regimes
WTO
Pacific Rim
Europe
North America
17
Regionalization/Triad Building Block or
Stumbling Block?
Pacific Rim
European Union
NAFTA
18
Impact of Integration on MNCs
Management Linkages ?
Country B
Country A
Integration
Trade and Investment Linkages
19
Impact of Integration on MNCs
  • Shift in Globalization Drivers
  • Market drivers
  • Cost drivers
  • Competition drivers
  • Entry Mode Decisions
  • Regional stand-alone attractiveness
  • Regional strategic importance
  • International Strategy
  • Location and integration of value-creating
    activities
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