Regional Economic Integration - Chapter 8
Which of the following exemplifies an economic bloc? A) EU B) WTO C) GATT D) UN
A
Which of the following factors will most likely contribute to the success of member nations of economic blocs? A) similar economies B) absence of economic dynamism C) distinct cultures D) emphasis on national autonomy
A
Which of the following helps foster economic integration on a global scale? A) WTO B) EU C) NATO D) UN
A
Which of the following is an example of a common market? A) EU B) ASEAN C) NAFTA D) EFTA
A
Which of the following is responsible for determining the admission of new member countries to the EU? A) the Council of the European Union B) the European Parliament C) the European Court of Justice D) the European Commission
A
Which of the following should be considered when making the decision to use a MERCOSUR supplier or a non-MERCOSUR supplier? A) Will the additional tariffs offset any savings for Bravo? B) Do other MERCOSUR nations use outside suppliers? C) What percentage of tariffs will Argentina receive? D) How will Bravo managers handle the free trade area?
A
CARICOM was formerly known as the Andean Pact.
FALSE
Countries in free trade areas only import and export products and services within the regional economic bloc.
FALSE
Economic nationalism refers to the economic interdependence experienced by closely associated countries that have formed an alliance.
FALSE
Firms often internationalize within an economic bloc in order to reduce exposure to competition
FALSE
Increased specialization leads to a fall in the standard of living.
FALSE
MERCOSUR, an economic bloc in Latin America, is an example of an economic union.
FALSE
Some European countries have political union due to the presence of a common currency.
FALSE
Submersion of all separate national institutions and perfect unification of all policies by a common organization is a characteristic of economic unions.
FALSE
Tariff restrictions are the most likely reason behind the failure of economic blocs in Africa.
FALSE
The Caribbean Community (CARICOM) is progressing toward establishing the Caribbean Single Market, a common market that allows for a greater degree of free movement of products, capital, and labor.
FALSE
The Common Agricultural Policy (CAP) has long been a fixture of the North American bloc
FALSE
The level of integration of free trade areas is greater than that of customs unions.
FALSE
The more diverse the economies of the member countries, the more likely the economic bloc will succeed.
FALSE
The most notable characteristic of economic blocs is that the member countries share the same language and culture.
FALSE
The summated output of the individual states is greater than the total output of the integrated bloc.
FALSE
Widened access to other economic blocs is one of the benefits of regional integration.
FALSE
An exporter from Canada would face the same tariff if importing into either Argentina or Brazil.
TRUE
Harmonization of standards is one of the steps taken by the EU to become an economic union.
TRUE
In economic unions, member countries often adopt standardized tax rates and exchange rates.
TRUE
Member countries that belong to the higher levels of regional integration must sacrifice control of their own economic affairs by submitting to the laws of the economic bloc's central authority
TRUE
NAFTA consists of Canada, Mexico, and the United States.
TRUE
Rationalization after regional integration reduces redundancy in a firm and thus lowers costs and improves the firm's operational efficiency.
TRUE
Regional integration gives rise to trade creation and trade diversion.
TRUE
Regional integration greatly increases the scale of the marketplace for firms inside the economic bloc.
TRUE
Slow progress in liberalizing trade, especially for agricultural products, has prompted many developing countries to seek alternatives to the global trading system favored by the WTO.
TRUE
The European Union is the world's largest, and most advanced regional economic bloc.
TRUE
The intraregion exports of the EU are greater than its extraregion exports.
TRUE
The introduction of the euro —the EU's common currency and now one of the world's leading currencies—meant that the monetary power of national governments within the EU was taken over by the European Central Bank.
TRUE
The level of integration of a political union is the highest.
TRUE
The most effective way for a foreign firm to enter an economic bloc is via foreign direct investment
TRUE
Under NAFTA, Canadian companies enjoy more trade and investment relationships with U. S. firms than with Mexican firms because of language similarities between Canada and the U.S.
TRUE
Describe the differences and similarities between the European Union and the European Free Trade Association, and explain how the EU helps member countries to acquire stronger defensive and political posture
The EU is the world's most integrated economic bloc. Over time, the EU has taken the following steps on its path to becoming a full fledged economic union: Market access—Tariffs and most nontariff barriers have been eliminated for trade in products and services. Rules of origin favor manufacturing using parts and other inputs produced in the EU. Common market—Barriers to the cross-national movement of production factors such as labor, capital, and technology have been removed. For example, an Italian worker now has the right to get a job in Ireland, and a French company can invest freely in Spain. Trade rules—The member countries have largely eliminated customs procedures and regulations, which streamlines transportation and logistics within Europe. Standards harmonization—The EU is harmonizing technical standards, regulations, and enforcement procedures that relate to products, services, and commercial activities. Where British firms once used the imperial measurement system (pounds, ounces, and inches), they have converted to the metric system used by all EU countries. Where German food merchants once had their own standard for handling meat and produce, they now follow procedures prescribed by the EU. The European Free Trade Association is the second-largest free trade area in Europe, established in 1960 by Austria, Britain, Denmark, Norway, Portugal, Sweden, and Switzerland. Most of these countries eventually left EFTA to join the EU; current EFTA members are Iceland, Liechtenstein, Norway, and Switzerland. The bloc promotes free trade and strengthens economic relations with other European countries and the world. The EFTA Secretariat, headquartered in Geneva, has negotiated trade agreements with several non-European countries. EFTA members cooperate with the EU via bilateral free trade agreements and, since 1994, through the European Economic Area arrangement, which allows for free movement of people, products, services, and capital throughout the combined area of the EFTA and the EU. Through regional integration, the EU is pursuing stronger defensive and political posture. One goal of regional integration is to strengthen member countries relative to other nations and world regions. This was one of the motives for creating the European Community (the precursor to the EU), whose members sought to strengthen their mutual defense against the expanding influence of the former Soviet Union. Today, the EU is one way Europe counterbalances the power and international influence of the United States. Forming an economic bloc also helps countries gain bargaining and political power in world affairs. For example, the EU enjoys greater influence with the WTO in trade negotiations than any individual member country. Broadly speaking, countries are more powerful when they cooperate than when they operate alone.
________ is the propensity for entrepreneurial activity and the existence of business systems that can support it, in a given business environment. A) Economic nationalism B) Mercantilism C) Economic dynamism D) Business nationalism
C
Explain how the creation of an economic bloc facilitates the rationalization of operations for international firms. Describe how the rationalization of operations can help firms achieve scale economies and enhanced productivity.
: The creation of an economic bloc decreases the importance of national boundaries. Instead of viewing the bloc as a collection of disparate countries, firms begin to view the bloc as a unified whole. Managers develop strategies and value-chain activities suited to the region as a whole, rather than to individual countries. Rationalization is the process of restructuring and consolidating company operations following regional integration to reduce redundancy and costs and increase the efficiency of operations. Management may combine two or more factories into a single factory, eliminating duplication and increasing economies of scale. In this way, the firm that formerly operated factories in each of several countries benefits by consolidating the factories into a single, central location inside the economic bloc. Companies can apply rationalization to other value-chain functions such as distribution, logistics, purchasing, and R&D. Formation of the EU and subsequent elimination of trade barriers, customs checkpoints, and country-specific transportation regulations allowed U.S. firms to restructure their EU distribution channels to make them better suited to the greatly enlarged EU marketplace. Creation of the economic bloc eliminated the need for separate distribution strategies in individual countries. Instead, the firms were able to employ a global approach for the larger marketplace, generating economies of scale in distribution. The rationalization of operations can help firms achieve scale economies and enhanced productivity. Expansion of market size within an economic bloc gives member country firms the opportunity to increase the scale of operations in both production and marketing, gaining greater concentration and increased efficiency. While a German firm may be only moderately efficient when producing 10,000 units of product for Germany, it greatly increases its efficiency by producing 50,000 units for the much larger EU market. Internationalization inside the bloc helps firms learn to compete outside the bloc as well. The firms enjoy additional benefits through increased access to factors of production that now flow freely across national borders within the bloc. Labor and other inputs are allocated more efficiently among the member countries. More efficient resource usage leads to lower prices for consumers.
A French sewing machine company, Sew-Right, has manufacturing facilities twenty miles outside of Paris. Since the formation of the EU, Sew-Right's managers have been considering internationalizing the Sew-Right company. Sew-Right's managers have also discussed the possibility of opening additional manufacturing facilities in Germany and Mexico. Sew-Right's managers and executives are discussing the various options at a conference, and hope to reach a decision soon. 75) Which of the following best supports Sew-Right's decision to internationalize into Germany instead of Mexico? A) Germany is a member of the same economic bloc. B) Language barriers will impose difficulties in Mexico. C) Germany would be a good launching point for Asia. D) A German facility would be modern and economical.
A
Canada restricts U.S. film and television producers from investing in the Canadian film market in order to retain Canadian TV and movie interests in the hands of Canadians. Which of the following drawbacks of regional integration is illustrated from this example? A) loss of national identity B) trade diversion C) sacrifice of autonomy D) presence of economic dynamism
A
Common markets differ from customs unions in that common markets ________. A) allow the free movement of products, services, and factors of production between member countries B) eliminate tariffs and non-tariff trade barriers when trade and business investments occur between member nations C) share a regulated system of tariff rates between member nations and equally distribute tax revenue received from non-member countries D) involve a central authority overseeing the monetary, tax, and fiscal policies of member nations
A
Country A and Country B are considering joining together into an economic bloc. Country A and Country B are both low-wage countries. Country A and Country B are separated from each other by Country C, which already belongs to an economic bloc. Representatives from Country A and Country B are meeting to discuss the possibilities of an economic bloc, and interpreters for each representative are assisting with the meeting procedures. 72) Which of the following is most important to consider when making the decision to create an economic bloc comprised of Country A and Country B? A) Are the economic interests and goals of both countries compatible? B) What would be the impact of an economic bloc on small firms in Country C? C) How successful has Country C been in an economic bloc? D) Can Country A and Country B agree on a central banking location?
A
Members of ________ benefitted the most from the maquiladora program. A) NAFTA B) EFTA C) EU D) MERCOSUR
A
NAFTA is an example of which of the following levels of regional integration? A) free trade area B) political union C) economic union D) common market
A
Which of the following statements is true of the economic union? A) Members strive to have common fiscal and monetary policies. B) MERCOSUR is an example of an economic union. C) To achieve greater economic integration, members establish border controls. D) It is a level of integration that is yet to be achieved.
A
Which of the following terms is used to refer to a nation in an economic bloc gradually ceasing to trade with non-member nations? A) trade diversion B) trade creation C) trade mandate D) trading diaspora
A
Which of the following would be the best option for Sew-Right if managers determine the company should be in Mexico but are hesitant about entering an unfamiliar bloc? A) establishing a joint venture with a Mexican company B) entering into a collaborative venture with an EU-based firm C) opening a maquiladora facility on the Mexican border D) establishing a greenfield investment in Mexico
A
Describe customs unions and explain why MERCOSUR is an example of a customs union. How can customs unions potentially reduce global free trade?
Answer: The customs union is the second level of regional integration, similar to a free trade area except that member states harmonize their external trade policies and adopt common tariff and nontariff barriers on imports from nonmember countries. MERCOSUR, an economic bloc in Latin America, is an example of this type of arrangement. The adoption of a common tariff system means that an exporter outside MERCOSUR faces the same tariffs and nontariff barriers when trading with any MERCOSUR member country. Determining the most appropriate common external tariff is challenging, because member countries must agree on the level and on how to distribute proceeds from the tariff among the member countries. Established in 1991, MERCOSUR, or the El Mercado Comun del Sur (the Southern Common Market), is the strongest economic bloc in South America. Within its borders, MERCOSUR established the free movement of products and services, a common external tariff and trade policy, and coordinated monetary and fiscal policies. Customs unions such as MERCOSUR can potentially reduce global free trade because regional integration can give rise to two opposing tendencies. On the one hand, a country that reduces trade barriers is moving toward free trade. On the other hand, an economic bloc that imposes external trade barriers is moving away from worldwide free trade. For example, countries that form a customs union impose common external trade barriers, and some member countries' external tariffs may actually rise. Suppose Germany, the EU's largest member, once had a 10 percent tariff on imported footwear. Assume that in the process of developing a common market, the EU countries collectively imposed a 20 percent tariff on footwear imports. In effect, Germany's external tariff on footwear has increased. In this way, regional integration can result in higher tariffs, making buyers inside the bloc worse off because they must pay higher prices for the products they want to consume. Tariffs also counteract comparative advantages and interfere with trade flows that should be dictated by national endowments. External trade barriers imposed by economic blocs result in a net loss in well-being to all members in the bloc.
Explain how economic blocs might prove detrimental to small firms. Provide an example of an industry or firm that was harmed as a result of regional integration.
As trade and investment barriers decline, protections are eliminated that previously shielded smaller or weaker firms from foreign competition. Companies typically find themselves battling new, often better-resourced rivals. New competitive pressures particularly threaten smaller firms, which may be absorbed or go out of business. The risk can be substantial for companies in smaller bloc countries, or in industries that lack comparative advantages. For example, under NAFTA, many U.S. companies in industries covered by the accord relocated their production to Mexico, the bloc member with the lowest wage rates. As a result, numerous firms in the U.S. tomato-growing industry went out of business as the industry shifted south to Mexico.
) A formal arrangement between two or more countries to reduce or eliminate tariffs is known as a(n) ________. A) quota arrangement B) free trade agreement C) memorandum of association D) memorandum of understanding
B
How does the creation of an economic bloc affect national boundaries? A) It alters boundaries geographically. B) It decreases the boundaries' importance. C) It dissolves international boundaries. D) It defines more strict boundaries.
B
Many European firms gain access to the NAFTA bloc by ________. A) exporting their manufactured goods to Canada B) establishing factories in Mexico C) advertising and marketing through U.S. media D) establishing political connections through U.S. firms
B
Members of ________ agree to adopt common tariffs and non-tariff barriers that are applied to imports from nonmember countries. A) free trade areas B) customs unions C) the NAFTA D) the EFTA
B
The ________ is the highest stage of regional integration that has so far been achieved. A) political union B) economic union C) common market D) customs union
B
The intended purpose of regional integration is to ________. A) increase the mobility of workers to countries outside the bloc B) reduce trade and investment barriers within the bloc C) streamline customs agency regulations within the
B
Which of the following blocs' success was most dependent on a shared language and culture? A) NAFTA B) MERCOSUR C) EU D) EFTA
B
Which of the following economic blocs includes Switzerland as a member country? A) EU B) EFTA C) CAN D) APEC
B
Which of the following has occurred as a result of NAFTA? A) workers at maquiladoras have instigated union strikes B) working conditions in member nations have improved C) Canadian exports to Europe and Asia have doubled D) foreign investors have been replaced by U.S. firms
B
Which of the following statements ideally supports Country A and Country B becoming an economic bloc? A) similarities in geographic features B) similarities in economic situations C) similarities in tariff rules and rates D) linguistic and cultural similarities
B
If Sew-Right decides to open a facility in Germany, which of the following will most likely occur first? A) formation of new board of directors B) modernization of the French facility C) rationalization of Sew-Right operations D) consolidation of Sew-Right's global suppliers
C
Since the formation of the EU, ________ has become the largest recipient of FDI from the United States. A) France B) Russia C) Britain D) Italy
C
The ________ is the level of regional integration that remains an ideal and is yet to be achieved. A) free trade area B) common market C) political union D) customs union
C
The second-largest free trade area in Europe is the ________. A) EU B) CAN C) EFTA D) BAFTA
C
Which of the following benefits do associate members of MERCOSUR enjoy? A) legal waivers B) low-cost labor C) preferential trade D) tariff exemption
C
Which of the following has the longest experience with regional integration? A) the United States of America B) Asia C) Europe D) the Middle East
C
Which of the following is an example of a customs union? A) NAFTA B) ASEAN C) MERCOSUR D) EFTA
C
Which of the following is the most likely reason for the establishment of the European Community? A) broaden the power of communism within East Germany B) create strict tariffs for trade and international business C) combine forces against the powerful former Soviet Union D) establish judicial procedures to handle trade violators
C
Which of the following questions would be most important for Bravo managers to evaluate when determining which supplier to use? A) How will using non-South American material affect the Bravo brand name? B) Will consumer buying decisions alter if Bravo sources material from Mexico instead of Paraguay? C) What will be the cost of materials shipped from Paraguay, Mexico, and China? D) Are other countries planning to join MERCOSUR in the near future?
C
Which of the following terms refers to two or more geographically connected nations in pursuit of free trade relations? A) grey market B) trading diaspora C) economic bloc D) business strategic unit
C
Bravo Luggage Company is a Latin American firm based in Buenos Aires, Argentina. Bravo has seen a sharp increase in orders over the last few months and needs to increase the amount of material imported from other countries. Currently, the materials used to manufacture Bravo luggage come from suppliers in Paraguay. Bravo managers have been approached by suppliers from Mexico and China who are both offering very competitive prices on materials. Which of the following statements best supports using a supplier from Paraguay over a supplier from Mexico or China? A) Material sourced from Paraguay is of better quality compared to the ones sourced from Mexico or China. B) Material sourced from Paraguay is more durable compared to the ones sourced from Mexico or China. C) As a member of a trade bloc, it is expected that Bravo resort to trade diversion, even if Mexico and China provide better materials at lower costs. D) Bravo could avoid tariffs because Paraguay is a member of MERCOSUR.
D
Regional integration often forces corporate restructuring which may lead to ________. A) economic nationalism B) increased trade barriers C) reduced global trade D) worker layoffs
D
The ________ is considered as the ultimate and the most advanced level of regional integration. A) customs union B) common market C) economic union D) political union
D
The ________ is the simplest and most common level of regional integration. A) common market B) political union C) customs union D) free trade area
D
Which of the following economic blocs will most likely merge with MERCOSUR to encompass all of South America? A) CER B) NAFTA C) CARICOM D) CAN
D
Which of the following is favored by the World Trade Organization? A) centrally planned economy B) unilateral trading system C) economic nationalism D) global trading system
D
Which of the following nations form the members of NAFTA? A) the United Kingdom, France, and Italy B) Canada, France, Britain, and Germany C) the United States, Mexico, and Brazil D) the United States, Canada, and Mexico
D
Which of the following nations is a member of MERCOSUR? A) Spain B) Cuba C) Mexico D) Argentina
D
Which of the following statements is true about the success factors for regional integration? A) The more distinct the economies of the member countries, the more likely the economic bloc will succeed. B) Countries should strictly hold onto their national autonomy in order to form a successful bloc. C) Economic dynamism, a factor for successful regional integration, is often deficient in developed economies. D) Similarity in political systems enhances prospects for a successful bloc.
D
Which of the following would most likely be the greatest obstacle to regional integration between Country A and Country B? A) a higher supply of skilled laborers from Country A compared to Country B B) the greater number of national institutions in Country B than Country A C) a lack of sufficient educational systems in both Country A and Country B D) the unwillingness of Country A to surrender autonomy to a central bloc authority
D
Which of the following would most likely result if Sew-Right opened a facility in Mexico? A) trade diversion B) streamlined distribution facilities C) increased relations with EU countries D) improved access to NAFTA members
D
Discuss the benefits of the worldwide trend toward regional economic integration, and briefly describe the five levels of economic integration.
One of the most remarkable features of contemporary international business is the worldwide trend toward regional economic integration. Also known as regional integration, regional economic integration refers to the growing economic interdependence that results when two or more countries within a geographic region form an alliance aimed at reducing barriers to trade and investment. In the last half-century, most nations have sought to cooperate, with the aim of achieving some degree of economic integration. More than 50 percent of world trade today takes place under some form of preferential trade agreement signed by groups of countries. The trend is based on the premise that, by cooperating, nations within a common geographic region connected by historical, cultural, linguistic, economic, or political factors can gain mutual advantages. The free trade that results from economic integration helps nations attain higher living standards by encouraging specialization, lower prices, greater choices, increased productivity, and more efficient use of resources. There are five possible levels of regional integration. The political union represents the ultimate degree of integration among countries, which no countries have yet achieved. The free trade area is the simplest and most common arrangement, in which member countries agree to gradually eliminate formal barriers to trade in products and services within the bloc, while each member country maintains an independent international trade policy with countries outside the bloc. The customs union is the second level of regional integration, similar to a free trade area except that member states harmonize their external trade policies and adopt common tariff and nontariff barriers on imports from nonmember countries. In the third stage of regional integration, member countries establish a common market (also known as a single market), in which trade barriers are reduced or removed, common external barriers are established, and products, services, and factors of production such as capital, labor, and technology are allowed to move freely among the member countries. An economic union is the fourth stage of regional integration, in which member countries enjoy all the advantages of early stages but also strive to have common fiscal and monetary policies. At the extreme, each member country adopts identical tax rates. The bloc aims for standardized monetary policy, which requires establishing fixed exchange rates and free convertibility of currencies among the member states, in addition to allowing the free movement of capital. This standardization helps eliminate discriminatory practices that might favor one member state over another.
Explain the purpose of regional economic integration. Why has it been a growing trend since World War II? What are the intended results of regional integration?
Regional economic integration refers to the economic interdependence that results when two or more countries within a geographic region form an alliance aimed at reducing barriers to trade and investment. Since the end of World War II, most nations have sought to collaborate with the aim of achieving some degree of economic integration. The trend is based on the premise that, by cooperating, nations within a common geographic region connected by historical, cultural, linguistic, economic or political factors can gain mutual advantages. The free trade that results from economic integration helps nations attain higher living standards by encouraging specialization, lower prices, greater choices, increased productivity, and more efficient use of resources.
Explain how custom unions work. What is an example of a customs union? What are some of the difficulties faced by customs unions?
The customs union is similar to a free trade area except that the member states harmonize their external trade policies toward nonmember countries. Unlike a free trade area in which individual countries have their own external trade policies, the members of a customs union adopt common tariff and nontariff barriers on imports from nonmember countries. MERCOSUR, an economic bloc in Latin America, is an example of this type of arrangement. A common tariff system means that an exporter outside MERCOSUR faces the same tariffs and non-tariff barriers by any MERCOSUR member country. Determining the most appropriate common external tariff is challenging because member countries must agree on the tariff level. In addition, governments must agree on how to distribute proceeds from the tariff among the member countries.
Describe the four characteristics typical of successful economic blocs. Which characteristic is considered the most important? Why?
a. Economic similarity—The more similar the economies of the member countries, the more likely the economic bloc will succeed. Significant economic instability in one member can quickly spread and harm the economies of the other members. For instance, a severe recession in one country increases the likelihood that others also experience an economic slowdown. b. Political similarity—Similarity in political systems enhances prospects for a successful bloc. Countries that seek to integrate regionally should share similar aspirations and a willingness to surrender national autonomy for the larger goals of the proposed union. c. Similarity of culture and language—Cultural and linguistic similarity among the countries in an economic bloc provides the basis for mutual understanding and cooperation. This partially explains the success of the MERCOSUR bloc in Latin America, whose members share many cultural and linguistic similarities. Following the passage of NAFTA, it was easier for Canadian firms to establish trade and investment relationships in the United States than in Mexico because of the similarities between the two northern countries. d. Geographic proximity—Most economic blocs are formed by countries within the same geographic region; hence the name, regional integration. Close geographic proximity of member countries facilitates transportation of products, labor, and other factors of production. Also, neighboring countries tend to be similar in terms of culture and language. While the four types of similarities enhance the potential for successful regional integration, economic interests are often the most important factor. Dissimilarity in one area can be overcome by similarity in the other areas. This was demonstrated in the EU, whose member countries, despite strong cultural and linguistic differences, are able to achieve common goals based on economic interests.
Describe four advantages of regional integration. Provide an example to illustrate each point.
a. Expand market size—Regional integration greatly increases the scale of the marketplace for firms inside the economic bloc. For example, while Belgium has a population of just 10 million, the absence of trade barriers with other countries in the EU gives Belgian firms easier access to a total market of roughly 500 million buyers. b. Achieve scale economies and enhanced productivity—Expansion of market size within an economic bloc gives member country firms the opportunity to increase the scale of operations in both production and marketing. This leads to greater concentration and increased efficiency in these activities. For instance, where a German firm may be only moderately efficient when producing 10,000 units of a good strictly for the German market, it greatly increases its efficiency by producing 50,000 units for the much larger EU market. c. Attract direct investment from outside the bloc—Compared to investing in stand-alone countries, foreign firms prefer to invest in countries that are part of an economic bloc because factories that they build within the bloc receive preferential treatment for exports to other member countries. For example, many non-European firms—including General Mills, Samsung, and Tata—have invested heavily in the EU to take advantage of Europe's economic integration. By establishing operations in a single EU country, these firms gain free-trade access to the entire EU market. d. Acquire stronger defensive and political posture—Economic blocs allow countries to obtain greater bargaining power and political power in world affairs. For example, the EU enjoys greater influence with the World Trade Organization in trade negotiations than any individual member country. Broadly speaking, countries are more powerful when than cooperate together than when they operate as individual entities.
