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    Quiz Ib 2

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    shnurmiera
    Regional economic integration aims to reduce trade barriers between countries, but it can disadvantage international businesses by encouraging workforce migration, creating trade inefficiencies, and requiring countries to give up some policy control. To protect themselves, firms can capitalize on new market opportunities, reduce costs, and may need to establish operations within the integrated region to avoid high trade barriers. A country seeking to attract foreign direct investment to boost growth should focus on developing human capital, infrastructure, macroeconomic stability, and trade policies conducive to investment.

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    Quiz Ib 2

    Uploaded by

    shnurmiera
    136 views2 pages
    Regional economic integration aims to reduce trade barriers between countries, but it can disadvantage international businesses by encouraging workforce migration, creating trade inefficiencies, and requiring countries to give up some policy control. To protect themselves, firms can capitalize on new market opportunities, reduce costs, and may need to establish operations within the integrated region to avoid high trade barriers. A country seeking to attract foreign direct investment to boost growth should focus on developing human capital, infrastructure, macroeconomic stability, and trade policies conducive to investment.

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    QUIZ

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    QUIZ IB 2

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    Regional economic integration aims to reduce trade barriers between countries, but it can disadvantage international businesses by encouraging workforce migration, creating trade inefficiencies, and requiring countries to give up some policy control. To protect themselves, firms can capitalize on new market opportunities, reduce costs, and may need to establish operations within the integrated region to avoid high trade barriers. A country seeking to attract foreign direct investment to boost growth should focus on developing human capital, infrastructure, macroeconomic stability, and trade policies conducive to investment.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    136 views2 pages

    Quiz Ib 2

    Uploaded by

    shnurmiera
    Regional economic integration aims to reduce trade barriers between countries, but it can disadvantage international businesses by encouraging workforce migration, creating trade inefficiencies, and requiring countries to give up some policy control. To protect themselves, firms can capitalize on new market opportunities, reduce costs, and may need to establish operations within the integrated region to avoid high trade barriers. A country seeking to attract foreign direct investment to boost growth should focus on developing human capital, infrastructure, macroeconomic stability, and trade policies conducive to investment.

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    of 2

    1. Describe the disadvantages of economic integration for international businesses.

    How can
    firms protect themselves from these threats? (2.5 marks)

    Regional economic integration is an agreements between countries in a geographic region


    to reduce tariff and non-tariff barriers to the free flow of goods, services and factors of
    production of between each other. Economic integration for international business has some of
    advantages. One of them is it encourages a shift in workforce. For example, a particular region
    offers lucrative opportunities, most professionals are bound to move from their native countries
    to the country with better opportunities. This may create new challenges to the native country as
    it tries to compete with the others. Second, trade inefficiency may crop up. For example, if one
    country traditionally engaged in trade with a particular country, their trade may be forced to stop
    if new laws are established which prevent countries from trading with others that do not belong
    to the economic union. Countries within the union may offer lower prices or may be too
    expensive, making trade difficult or less lucrative. Lastly, regional economics requires member
    countries to give up some degree of control over key policies like trade, monetary and fiscal
    policies. The higher the level of integration, the greater the degree of controls that needs to be
    given up particularly in the case of a political union economic integration which requires nations
    to give up a high degree of sovereignty.

    Firms can protect themselves from these threats by taking some actions. To survive, firms
    will have to capitalize on the opportunities presented by the creation of an integrated marketplace
    and rationalize their production and reduce their costs. Companies that are outside of trading
    areas such as the EU may find themselves facing a trade fortress with high barriers to imports
    and investment. Consequently, firms may find that to protect themselves, they will need to
    establish operations "on the inside." Finally, firms may find their strategic choice limited by
    restrictions on proposed acquisitions and mergers. Firms may find that they must make
    significant concessions in order for their proposed plans to move ahead.
    2. A country X intends to attract the foreign direct investment to foster faster economic growth.
    What is your advised to the government of country X? ( 2.5 marks)

    From my opinion, a country X takes a good action for its development country and the
    economic growth. FDI provides the benefits of reduced cost through the realization of scale
    economies and coordination advantages especially for integrated supply chains.

    Even though past studies show that FDI and trade have a positive impact on economic growth,
    the size of such impact may vary across countries depending on the level of human capital,
    domestic investment, infrastructure, macroeconomic stability, and trade policies. The literature
    continues to debate the role of FDI and trade in economic growth as well as the importance of
    economic and institutional developments in fostering FDI and trade. This lack of consensus
    limits our understanding of the role of FDI and trade policies in economic growth processes and
    restricts our ability to develop policies to promote economic growth.

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