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Chapter 8: Capitalizing on Global and Regional Integration
Chapter 8
Capitalizing on Global and Regional Integration
Learning Objectives
After studying this chapter, students will be able to accomplish the following objectives:
1. Make the case for global economic integration.
2. Explain the evolution of the GATT and the WTO, including current challenges.
3. Make the case for regional economic integration.
4. List the accomplishments, benefits, and costs of the European Union.
5. Identify the five organizations that promote regional trade in the Americas and describe
their benefits and costs.
6. Identify the four organizations that promote regional trade in the Asia Pacific and describe
their benefits and costs.
7. Articulate how regional trade should influence your thinking about global business.
Chapter Overview
Chapter 8, Capitalizing on Global and Regional Integration, begins with an introduction to the
European Union and World Trade Organization, and it then broadens to differentiate between
regional and global economic integrations in general. The chapter discusses several political and
economic benefits of an integrated global economy. It then provides a historical context for how
trade has come to be organized on a global level. Created in 1948, the General Agreement on
Tariffs and Trade, or GATT, was the most prominent global trade agreement until 1995, when it
was succeeded by the WTO, transforming it from a provisional treaty to a full-fledged
international organization. The chapter then moves from a global to a regional perspective,
outlining the pros and cons of regional economic integration. Five different types of regional
trade agreements are introduced and discussed, as are modern regional trade organizations such
as the EU in Europe, NAFTA in the Americas, and ASEAN in the Asian Pacific.
Opening Case Discussion Guide
Brexit
On June 23, 2016, in a referendum Britain voted by 52 percent to 48 percent to leave the
European Union (EU), sending shock waves throughout the world. Although the term “Brexit”—
British exit from the EU—was coined in 2012, the 2016 referendum was in fact a second
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Chapter 8: Capitalizing on Global and Regional Integration
referendum on “Leave or Remain.” The 2016 Leave campaign was led by the UK Independence
Party (UKIP), which was founded in 1991. It views the EU as being responsible for “flooding.”
The Remain campaign was supported by Cameron’s Conservative government.
The Leave campaign succeeded. Within a few days after the referendum, the economic impact
was immediate and devastating. The pound took a severe pounding, plummeting to its lowest
level against the dollar in three decades.
While markets gradually recovered, realities set in. The EU absorbs 54 percent of all UK exports,
and three million UK jobs depend on exports to the EU. Long fed up with British fickleness, EU
leaders are frustrated with seemingly endless concessions Britain demanded. EU leaders such as
German Prime Minister Angela Merkel warned that Britain could not “cherry-pick” and could
not expect “to leave the family to get rid of all obligations while holding on the privileges.”
Lesson Plan for Lecture
Brief Outline and Suggested PowerPoint Slides
Learning Objectives PowerPoint Slides
Learning Objectives Overview 2–3: Learning Objectives
LO1
Make the case for global economic
integration.
4: Economic Integration
5: Integrating the Global Economy
6: Exhibit 8.1: Benefits of Global
Economic Integration
LO2
Explain the evolution of the GATT and the
WTO, including current challenges.
7: General Agreement on Tariffs and Trade:
1948–1994
8: World Trade Organization: 1995–Present
9: The Doha round
LO3
Make the case for regional economic
integration.
10: Pros and Cons of Regional Economic
Integration
11: Exhibit 8.2: Types of Regional
Economic Integration
LO4
List the accomplishments, benefits, and
costs of the European Union.
12–13: Origin and Evolution of the
European Union
14–15: European Union (EU)
16: Exhibit 8.3: Benefits and Costs of
Adopting the Euro
17: Challenges Faced by the EU
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Chapter 8: Capitalizing on Global and Regional Integration
LO5
Identify the five organizations that promote
regional trade in the Americas and describe
their benefits and costs.
18–19: North American Free Trade
Agreement (NAFTA)
20–21: Economic Integration in South
America
LO6
Identify the four organizations that promote
regional trade in the Asia Pacific and
describe their benefits and costs.
22–24: Economic Integration in the Asia
Pacific
LO7
Articulate how regional trade should
influence your thinking about global
business.
25–26: Management Methods for Global
and Regional Economic Integration
Debate 27: Debate: Food versus Trade
Key Terms 28–30: Key Terms
Summary 31–32: Summary