CH 3: Regional Economic Integration

ASEAN

Association of Southeast Asian Nations

Which country concerns the Association of Southeast Asian Nations (ASEAN) because of its economic ascendancy on the world stage?

China

Which country has been the United States' second largest trading partner since 2005?

China

According to the text, all of the following are European Union (EU) member states EXCEPT which country?

Ukraine

Steps to Regional Integration

1. Start small 2. Think global 3. Compensate the least fortunate

In what year was the Association of Southeast Asian Nations (ASEAN) established?

1967

Which country opted out of using the euro as its currency when joining the European Union (EU)?

Denmark

Which central bank is considered the world's most independent?

European Central Bank (ECB)

Which of the European Union's (EU's) 27 member countries has one of the smallest populations but largest gross national income (GNI) per capita (as of 2019)?

Luxembourg

What country, in addition to Canada and the United States, is a member of the USMCA?

Mexico

NAFTA

North American Free Trade Agreement; allowed open trade with US, Mexico, and Canada.

Major Classes and Characteristics of Regional Integration

Regional Blocs Close to World Markets Remote Regions with Large Local Markets Remote Regions with Small Local Markets

When various regional integration blocs are analyzed from an economic geography perspective, they fall under distinct categories. Which category inherently has an advantage, particularly when connecting to markets, suppliers, and ideas?

Regional blocs close to major world markets

What is one reason why oil-rich Middle Eastern economies have failed to benefit from their proximity to the European Union (EU) market?

The region's investment climate is weak.

For what primary reason do countries pursue regional integration at the expense of multilateral trade liberalization?

To enhance issues of mutual interest

Which candidate country's membership in the European Union (EU) has been highly controversial?

Turkey

The benefits and costs of regional integration crucially depend upon the level of integration the countries in the group achieve. Which of the following is considered a cost of regional integration?

Uniform laws and regulations

Which country derailed attempts by the United States to establish a Free Trade Area of the Americas (FTAA)?

Venezuela

According to the text, which of the following is the first step toward regional integration?

a free-trade area

customs union

a group of free-trade member countries that have adopted a common external tariff with nonmember countries

common market or single market

a market formed when member countries of a customs union remove all barriers to allow the movement of capital and labor within the customs union

Country A is a small, agricultural-based nation with significant untapped oil reserves. It is surrounded by Countries B, C, and D that effectively shut it off from any access to waterways. For the last 50 years, the impoverished Country A has experienced ongoing border conflicts with Country C. Based on these characteristics, what type of region is Country A most likely a part of?

a remote region with a small local market

What is a likely outcome if multilateral trade and investment liberalization fails to progress?

a rise in regional integration blocs

economic and monetary union

a union formed when members of a common market agree to implement common social programs (on education, employee benefits and retraining, health care, etc.) and coordinated macroeconomic policies (such as fiscal and monetary policies) that would lead to the creation of a single regional currency and a regional apex central bank

free-trade area

an area in which two or more countries agree to eliminate all barriers to trade, such as tariffs, quotas, and nontariff barriers like border restrictions, while at the same time keeping their own external tariffs (within WTO guidelines) against nonmembers

Which sector in all three member countries benefits significantly from the United States-Mexico-Canada Agreement (USMCA)?

auto

Which stage of integration brings the elimination of tariffs and quotas among members, the end of restrictions on factor movements, and the adoption of a common external tariff and quota system, but does not harmonize or unify its economic policies and institutions?

common market

If three countries are attempting regional integration, the appropriate approach for these countries should include which of the following fundamentals?

compensating the least fortunate

What is the study of principles that govern the efficient spatial allocation of economic resources and the resulting consequences referred to?

economic geography

During which phase of integration do countries behave as if they were a single country?

economic union

According to the text, how many stages are there to regional integration?

four

All of the following are threats to global economic integration EXCEPT for which example?

governments promoting an agenda of global integration

The U.S. and Central American economies are relatively complementary. In which areas does the United States have a competitive advantage?

grain production

regional integration

implementation of a multitude of economic and/or political steps by member states to increase their global competitiveness, including preferential trade access

renegotiations

negotiation of something again in order to change the original agreed terms. discussions and proposed changes to an existing treaty

The creation of the United States-Mexico-Canada Agreement (USMCA) demonstrated just how much its predecessor, the North American Free Trade Agreement (NAFTA), had shifted away from free trade to focus on what types of issues?

nontariff regulatory issues

What do member countries need to undertake for regional integration to be successful?

spatial transformations

spatial transformations

the process of allowing efficient geographic distribution of business activities within and among countries

political union

the union created when member countries of an economic and monetary union work closely with one another to arrive at common defense and foreign policies and behave as a single country

What is the purpose of the ASEAN Regional Forum (ARF)?

to discuss major security issues in the region

Why do countries primarily form economic cooperation agreements?

to enhance issues of mutual interest

Which country is far from the big markets?

Australia

Economic integration can take several forms, representing varying degrees of integration. The EU, headquartered in Brussels, Belgium, is the most highly evolved example of regional integration in the world. The EU has eliminated barriers to trade, uses a common external tariff and quota system, does not restrict movement among member nations, and has coordinated macroeconomic policies and a regional currency. This places the EU firmly within which stage of regional integration?

Economic union

Which Association of Southeast Asian Nations (ASEAN) member country has the largest total trade volume (USD in 2018)?

Indonesia

After the success of the North American Free Trade Agreement (NAFTA), the United States had hoped to create a similar agreement in Latin America but was unsuccessful. What was the primary reason why the Free Trade Area of the Americas (FTAA) failed?

Venezuela expressed opposition to the FTAA in general and the role of the United States in particular.

All of these are potential benefits of regional integration EXCEPT for which example?

reduction in national government powers

Which concept describes economic and/or political steps, including preferential trade access, taken by member states of a union to increase their global competitiveness?

regional integration

economic geography

the study of principles that govern the efficient spatial allocation of economic resources and the resulting consequences

Which of the following is an objective of the Association of Southeast Asian Nations (ASEAN)?

to promote regional peace and stability