Regional integration is a process in which states enter into a supranational regional organization in order to increase regional cooperation and diffuse regional tension (Wikipedia, 2008). Agreements in regional integration can be made to reduce, and ultimately remove, tariff and non-tariff barriers to the free flow of goods, services, and factors of production between countries (Hill, 2004)
This paper will analyze the role of regional integration play in promoting global business. Discuss the advantages and the disadvantages of regional integration. In addition, compare and contrast the economic development stages of countries within a chose region and the effect of the economic development in global business. The geographical region that will be analyzed will be North American Free Trade Agreement (NAFTA).
The North American Free Trade Agreement (NAFTA) is an agreement between the United States, Canada and Mexico that eliminates most tariffs on products traded between the three countries. Since it has been in effect in January 1, 1994, (NAFTA) has been a major force in increasing the agricultural trade among the three countries and it is the largest trade bloc in the world in terms of combined gross domestic product (GDP) of its members.
Since implemented, the overall trade between the United States and Mexico has increased by 149 percent and the percentage of increase of trade between the United States and Canada has been 112 percent. In addition, trades between these three countries have improved themselves over $333.8 billion throughout the existence of the unification (Kroll, 2005).
The advantage of regional integration is unrestricted free trade and open trade. This allows countries to focus in the production of goods and services that they ca ...