nstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
Instructor Manual
Chapter Chapter 9: Global Integration and Multilateral
Organizations
to accompany Mike Peng & Klaus Meyer: International Business, Cengage Learning
Prepared by Klaus Meyer
version February 2011
Introduction to the Topic
Learning Objectives
1. explain the multilateral institutions of global trade system, and their current challenges
3. describe the advantages and disadvantages of regional and bilateral economic integration in the
Americas, Asia Pacific, and Africa.
5. draw implications for action.
General Teaching Suggestions
This chapter explores the institutional changes at multilateral level that have been a driving
force between global economic integration over the past half century. The main multilateral
organizations discussed are the WTO facilitating international trade and the IMF helping to
overcome financial imbalances. In addition, we discuss regional and bilateral collaborations,
and the debates and extension section introduces the World Bank the Kyoto Agreement and
the Basle Committee. To motivate a general discussion, you, as instructor, may ask “is
globalization unavoidable?”, or “Is globalization a consequence of technological change, or is
it pushed along by political actions by governments?”
Opening Case Discussion Guide
The opening case explores one of the longest running trade disputes that the WTO repeatedly
had to deal with, the subsidies (or other support) provided by respectively the EU and the
nstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
USA to Airbus and Boeing. I suggest to introduce this case by presenting Table 9.1 and
(rather than discussing the merits of individual points) simply ask “obviously these are
complex arguments – who should decide what is right and wrong in such complicated trade
matters?”
Chapter Outline, Section by Section
Section 1: The Multilateral Trade System
Key Ideas
Domestic economic activity depends on institutions created by relevant societies, parliaments
and governments (Chapter 2 and 3). Equally, international trade depends on rules. Countries
have been collaborating in the GATT and the WTO to establish such rules.
Key Concepts
global economic integration
Efforts to reduce trade and investment barriers around the globe.
World Trade Organization (WTO)
The organization underpinning the multilateral trading system since 2005.
principle of non-discrimination
A principle that a country cannot discriminate among its trading partners (a concession given to one
country needs to be made available to all other GATT/WTO members).
General Agreement on Tariffs and Trade (GATT)
A multilateral agreement governing the international trade of goods (merchandise).
nstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
Dispute settlement mechanism
A procedure of the WTO to resolve conflicts between governments over trade-related matters.
The Doha Round
A round of WTO negotiations started in Doha, Qatar, in 2001—officially known as the “Doha
Development Agenda.”
Section 2: The Multilateral Monetary System
Key Ideas
Key Concepts
International Monetary Fund (IMF)
A multilateral organization promoting international monetary cooperation and providing temporary
financial assistance to countries with balance of payments problems.
Section 3: Regional and Bilateral Integration
Key Ideas
We discussed the EU in the previous chapter as the probably most integrated regional
cooperation. However, regional integration is also common elsewhere. This section briefly
introduces the main initiatives in the Americas, Asia and Africa.
Key Concepts
nstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
A free trade agreement between the USA and five Central American countries and Dominican
Republic.
Andean Community
A customs union in South America that was launched in 1969.
Union of South American Nations (UNASUR)
An initiative to further economic and political integration in South America
Association of Southeast Asian Nations (ASEAN)
The organization underpinning regional economic integration in Southeast Asia.
ASEAN-China Free Trade Agreement (ACFTA )
An agreement to establish a free trade area encompassing ASEAN and China
Section 4: Debates and Extensions
Key Ideas
The first debate concerns the role of the World Bank in promoting economic development in
the least developed countries.
The second debate concerns the role of the Kyoto Agreement and the Copenhagen Accord as
joint initiatives aimed to constrain climate change.
nstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
A gift from generous donors wishing to help developing countries
European Bank for Reconstruction and Development (EBRD)
A multilateral bank designed to help transition economies
Section 5: Implications for Practice
Key Ideas
This final section stresses the link between multinational organizations and the strategies and
practices of individual firms.
Review Questions
Review questions are provided to students on the website accompanying the book. They
directly ask to summarize the material provided in the text. Instructors may also use the
questions to structure their lectures or review sessions.
Review Questions
(as provided to students on the website)
Material in the Book
1. What are the key arguments in the EU and the USA
in the Boring-Airbus conflict? What is the role of the
WTO in resolving this conflict?
Pages 264-66
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fail to advance trade liberalization?
6. What are the objectives of the IMF?
9. What are the key arrangements of regional
integration of in Latin America, and what challenges
is the region currently facing?
10. What are the key arrangements of regional
integration of in Asia, and what challenges is the
region currently facing?
11. What are the key challenges for regional integration
in Africa?
12. How do regional trade agreements cause a
potentially damaging side-effect called trade
diversion?
Page 271-72
Page 276-77
Page 277-78
Page 279
Page 280 and In Focus 9.4
Critical Discussion Questions
At the end the chapter, we provide discussion questions that aim to stimulate students
thinking beyond memorizing the material learned in the chapter. They are designed to be
used at a basis for in-class discussions, group work, or individual assignments. Below,
provide some indicative answers of issues that may be raised in response to these questions.
Discussion Questions
(as provided in the book)
Indicative Responses
1. The Doha Round collapsed because many countries
believed that no deal was better than a bad deal. Do
you agree or disagree with this approach? Why?
All these questions are about
developing a coherent,
rigorous argument using
nstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
3. Who should be in charge of regulating and supervising
banks that operate internationally? What principles
should guide such regulation?
Closing Case
The closing case provides further opportunities to apply ideas and concepts learned in this
chapter in a real world setting. The Closing Case for this Chapter is “INSERT” and focuses
on “INSERT”. Below are some indicative responses to the case discussion questions.
Case Discussion Questions
(as provided in the book)
Indicative Responses
1. From a resource-based perspective, how is
technological change likely to influence
future paths of globalization?
All these questions are about
developing a coherent, rigorous
argument using concepts and
Further Learning Activities
In addition to the cases and discussion questions provided in the book, instructors may want
to use any of the following activities to further engage students with the material.
1. Your firm is considering developing business in the Middle East. Many in your company are
aware that there is considerable economic cooperation currently underway in the region.
However, there is very little information in current internal entry evaluation documents
concerning the possible regional trade agreements that may already exist. Identify at least one
regional trade agreement and its member countries in the Middle East.
One resource which can be used is “Cooperation Council for the Arab States of the Gulf
(GCC)”. This website can be found by entering the search term “gulf cooperation” at the
nstructorManualtoMikePeng&KlausMeyer(2011):InternationalBusiness,CengageLearning.
Errors and Corrections
(ONLY FOR SUBSTANTIVE CORRECTIONS, ELSE DELETE THIS SECTION)
Further Readings
At the end the chapter, suggested further readings are provided. The primary aim is to
provide students a starting point for further work, for example when preparing a class
assignment or dissertation. These references also are recommended for instructors not
familiar with the topic and wishing to ‘get ahead of the students’ before lecturing on a topic.
B.M. Hoekman & M.M. Kostecki, 2009, The Political Economy of the World Trading System, 3rd ed.,
Oxford: Oxford University Press – a book explaining how the WTO has evolved and how it works in
practice.
A.O. Krueger, Wither the World Bank and the IMF? JEL, 36, 1983-2020 – a review and evaluation of the
activities and policies of the financial multilateral institutions from the 1940s to the 1990s.