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History And Functions Of Regional Trade Blocs Economics Essay

A regional trade bloc is referred to the agreement between the governments or even a part of the organizations where the trade barriers including the non tariff and tariffs barrier are eliminated between the states which are participating in the states. In addition to this the trade blocs are defined its member states against the global competitiveness. Regional trade blocs are established to promote the trade at global level (El-Agraa, 1997). In order to tackle with the global competition, the government in each country has established some restrictions including tariffs on goods manufactured by the member states, government subsidies technical and other non tariff barriers, import quotas, onerous bureaucratic import processes. At present there have been four major trade blocs such as ASEAN, EU, MERCOSUR and NAFTA. This assignment report provides the discussion on international trade and regional trade blocs along with the advantages of such blocs.
Historical View: Historically the first economic bloc was developed in Germany under the name of German Customs Union in 1834. It was formed on the basis of German Confederation and later on by the German Empire in 1871, a main surge in the trade bloc was noticed in the decade of 60s and 70s and subsequently in 90s during the collusion of communism. Under the rise of global competition approximately 50% of the world trade was taken place from regional blocs. According to the economist Jeffery (1993), there were four common traits shared by the members of successful trade blocs such as geographic proximities, political commitment to the regional organization, similar level of per capita GNP and compatible trading regimes. The member sates who are advocating the free trade is opposed to the trade blocs as it is the argument to promote regional blocs against the global free trade (Bernal, 1997). The worldwide economists still argued that whether the regional bloc leads to the fragmented world economy or it is encouraging the stretch of present global multilateral trading system. According to the world economists, trade blocs are basically a trade agreement between the several states which produced the goods and it’s a part of the regional organization (Bernal, 1997). There are the several different categories of trade blocs which are defined based on the level of economic integration such as monetary union, custom union, economic union, preferential trading areas, and common market and free trade areas (O’Loughlin and Anselin, 1996).
Major Trade Blocs: There are four major trade blocs as ASEAN, EU, MERCOSUR and NAFTA. ASEAN is known as Association of South East Asian Nations and was established in 1967 in Bangkok, Thailand. Member countries in ASEAN are Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. The main goal of trade bloc is to promote the regional peace and stability among the nations, adherence to the United Nations Charter, accelerating the growth, cultural development and social progress within the nations. The collective population of ASEAN is 592 million with the total GDP of USD 1.492 trillion and total trade is accounted US$1.536 trillion as of 15 March 2010.
European Union (EU) was founded in 1951 with the aim of developing a regional free trade association, developing the economic and executive connection and healthy relationship among the member states. Presently there are 27 member countries are associated with the European Union including Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Poland, Portugal, Romania, Slovakia, Slovenia,
Spain, Sweden, The Netherlands, and the United Kingdom. The total population of the EU is approximately 500 million with the accumulated GDP of USD 15,247 trillion.
MERCOSUR was established on 26 March 1991 by the treaty of Assuncion. The member countries are divided into two such as full member countries and associate member countries. Argentina, Brazil, Paraguay, Uruguay, and Venezuela are the full member countries where as Bolivia, Chile, Colombia, Ecuador, and Peru are associate member countries. The only difference between the full member and associate member countries is that the associate member countries can access only the preferential trade but not the tariff benefits as like full member countries. The aim of the MERCOSUR trade bloc is to integrate the member state for the purpose of accelerating the sustained economic development depending on the social justice, combating poverty and environmental protection. The overall population is 273 million with the total GDP of USD 2.774 trillion.
NAFTA is known as North American Free Trade Agreement and was established in 1994. The aim of NAFTA is to eliminate the trade barriers among the member countries, increase the investment opportunities, promoting the conditions for free trade and protecting the intellectual property rights. Member countries are Canada, Mexico, and the United States of America.
A recent example of trade bloc is EU which has strengthened the power of individual country. For Example Europe Based Airbus is a largest Aircraft manufacturer which was able to increase its market share by 21% to 50% due to the development of EU as trade bloc. The company was established in 1970 as a consortium of French and German companies. It was later on expanded to Italy and Spain due to the diversity of European Union.
(Source: of the European Union.htm)
Advantages of Trade Bloc: There are the following advantages of trade blocs:
Foreign Direct Investment: it attracts the foreign direct investment which provides the benefits of economies of participating the nations. It builds large market which resulted in low cost of manufacturing to the products locally.
Economies of Scale: The development of large market provides the benefit of economies of scale where the average cost of production is reduced and bulk production can be accessible.
Competition: it provides the opportunities to the manufacturer from different regions to come closer and developed the greater competition. It also increases the greater efficiency of the companies.
Trade Effects: the trade blocs eliminate the tariffs which further reduces the cost of importing the goods. Moreover the demand changes and provides the better choices to the consumers for purchasing the products at lowest possible prices.
Market Efficiency: a greater combination exists after the rise in the competition with the better emphasis on market efficiency.
(Source: Mansfield and Helen, 2005)
Conclusion: A number of organizations believe that the free trade is threatening the choice of their freedom which further pressurizes the countries to harmonize their products to the voluntary preferences (Milner, 2004). The countries therefore believe that the free trade agreements are meant for making money from the businesses and put before the welfare of the countries. On the other hand it provides the opportunity for the member countries to share their expertise and promote the zero tariff trade to benefit the society as a whole (Jaime and Panagariya, 1992).

Poverty And Hunger In Africa Economics Essay

In different places all over the globe, especially evident in developing nations, it is very much obvious that the problem of poverty is far-reaching. It is attributed to be the cause of other problems which are the main causes of human suffering. The problem with poverty inevitably leads into other worse predicaments such as hunger which in turn brings about both mortality and morbidity. Because of the existence of poverty, there is insufficiency in food resources and results into an increase in the rates of different illnesses, especially those resulting from hunger.
In this paper, the author wishes to provide a discussion about poverty and hunger, and on how the two factors are interrelated. The researcher finds the topic interesting because the problem with poverty and hunger has already proven to be widespread and brings about a number of consequences leading to the suffering of mankind. This problem is especially evident in Africa, which shall be the focus of this study. Furthermore, this paper will also capitalize on some facts and statistics which will be helpful in painting a clearer picture of how problematic hunger and poverty becomes today. Lastly, to be able to provide a solution to this growing problem, a set of solutions and recommendations will also be suggested.
This paper wishes to outline poverty and hunger in terms of its causes as well as the consequences it bring. Aside from the general discussion regarding the background of the problems on hunger and poverty, this paper will also provide a specific discussion on poverty and hunger, food as a commodity, HIV/AIDS, and other problems in the African setting which are brought about by both poverty and hunger. The methodology which will be used in the completion of this research will also be discussed. Moreover, another significant section of this research paper will be the exploration of the two sides of the issue which will be both examined. The first side lies on the notion that government can help in the stipulation and execution of solutions to the problem. On the other hand, another side of the issue which will be considered in this paper is the argument that the government cannot extend any help to the people who are suffering from the consequences of poverty and hunger. Finally, the last section of this paper will present a set of conclusions and recommendations to be able to help solve the problems of poverty and hunger in Africa.
One of the most commonly used definitions of poverty is that which is provided by the United Nations reiterating that poverty basically entails the denial of choices and opportunities which then results into the violation of human dignity. Poverty can also be translated into the lack of basic capacity to be participatory in the society. Inevitably, the causes of hunger become as well the causes of poverty as the two problems are deemed to be closely linked to each other. In fact, one of the root causes of hunger, needless to say, is poverty itself. Different factors have been identified to be able to provide a clearer discussion of how poverty leads into hunger. Some of the most salient points about such issue will be provided in the succeeding paragraphs of this section.
Ownership of the land and the rights to control such property are two of the factors which are often overlooked when thinking about the main factors which can significantly lead into hunger. The issue on the buying and control of land is not at all helpful in the provision of solution to the problem. Instead of delivering the economic benefits it promises, it often leads into lack of food security and supply because the land is often used for reasons other than the provision of food products such as agricultural crops among others (Shah, 2010).
In addition to the issue of land ownership and control as being related to poverty and hunger, it ahs also been identified that war, famine, and the lack of democracy can be identified as the main causes of the problem (Shah, 2010). Because of teh war, there are many consequences which people have to suffer, and such leads into poverty. For instance, war destroys the food resources which then leads into shortage and result into hunger. War also leads into the death of many parents who are the main sources of income from different families. Because of their death, as brought about by war, many children tend to suffer from poverty and hunger.
Shah (2010) also attributes the diversion of land use as another reason on why people are suffering from extreme poverty and hunger. The land is often now used for dam projects and tobacco plantations. Because of these, lesser land is used for the purpose of growing food supplies, thereby also contributing to the problem of poverty and hunger. Because of the dam projects, many people were displaced from their homes and the project also resulted into flooding which causes damage to arable land. All of these factors, although may not prove to be as always highlighted prove to be contributory to hunger and poverty.
Furthermore, Shah (2010) also noted some specific details about the problem which is generally related to the presence of hunger and poverty. One of the arguments raised by Shah (2010) is the fact that food has been seen and treated to be a commodity nowadays. Therefore, because of its nature as a commodity, only the people who have the necessary financial resources are the ones who are able to have and gain access to different food supply. On the other hand, those who are deprived of financial freedom are not able to find the appropriate means to gain access to sufficient foods.
Furthermore, to be able to have a better understanding on the specific background of the problem, it would also be useful to take a look at some statistics which is reflective of the extent of the problem which has been brought about by hunger and poverty. According to statistics, because of poverty, at least 50,000 people die everyday and 18 million deaths of the poor population die yearly because of poverty. This figure is very alarming as it constitutes to about one third of all the deaths of man, considered to be the factor which constitutes the most to human deaths. In addition to this statistics, it has also been reported that 39.5 million people are suffering from AIDS, and most of them, around 63%, are living in Sub-Saharan Africa. This resulted into numerous deaths in the region and continues to persist as one of the most pressing problems of today. In Africa, the problem with hunger and poverty has proven to be too extreme that everyone, even the government, finds it too hard to handle the said problem. Aside from the lack of access to food resources, contamination with water supply has also been a problem in Africa which generated many illnesses such as cholera and others. all of these can be attributed to extreme poverty which translates into lack of access to clean potable water as well as the food supplies with the appropriate nutritional contents (Cozay, 2010; Hearts