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April 2011 Question 2 Part Ba) Explain the following: (10 marks, hapter !) "hapter !#regional eonomi integration

i) $he European %nion (E%)&A group of European countries that participates in the world economy as one economic unit

and operates under one official currency, the euro. The EU's goal is to create a barrier-freetrade zone and to enhance economic wealth by creating more efficiency within their

marketplace.

The European Union is a group of countries whose goernments work together. !t's a bit like

a club. To "oin you hae to agree to follow the rules and in return you get certain

benefits.Each country has to pay money to be a member. They mostly do this through

ta#es.The EU uses the money to change the way people lie and do business in

Europe.$ountries "oin because they think that they will benefit from the changes the EU

makes.

The current formalized incarnation of the European Union was created in %&& with %( initial

members. )ince then, many additional countries hae since "oined. The EU has become one

of the largest producers in the world, in terms of *+, and the euro has maintained a

competitie alue against the U.). dollar. EU and non-EU members must agree to many

legal reuirements in order to trade with the EU member states.

ii) $he 'orth Ameria ree $rae Agreement ('A$A)&

!n %&&, the /orth American 0ree Trade Agreement 1/A0TA2 came into effect, creating one

of the world3s largest free trade zones and laying the foundations for strong economic growth

and rising prosperity for $anada, the United )tates, and 4e#ico. )ince then, /A0TA has

demonstrated how free trade increases wealth and competitieness, deliering real benefits

to families, farmers, workers, manufacturers, and consumers.

)ince /A0TA came into effect, trade and inestment leels in /orth America hae increased,

bringing strong economic growth, "ob creation, and better prices and selection in consumer

goods. /orth American businesses, consumers, families, workers, and farmers hae all

benefited. /A0TA proides /orth American businesses with better access to materials,

technologies, inestment capital, and talent aailable across /orth America

Each /A0TA country forgoes tariffs on imported goods 5originating6 in the other /A0TA

countries. 7ules of origin enable customs officials to decide which goods ualify for this

preferential tariff treatment under /A0TA. The negotiators of the Agreement sought to make

the rules of origin ery clear so as to proide certainty and predictability to producers,

e#porters, and importers. They also sought to ensure that /A0TA3s benefits are not e#tended

to goods imported from non-/A0TA countries that hae undergone only minimal processing

in /orth America.

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*) +isuss two (2) aantages an two (2) isaantages of regional trae agreement(-$A)& (10 marks, hapter !)

Adantages

8 4arket Access 9 members of 7E! gain access to markets of other members easily

8 !ncreased competition : firms become efficient to stay competitie ; increased

competition induce firms outside 7E! to cut prices

8 !ncreased 17eturn base : firms to increase productiity : wider choice of goods and serices to

consumers

8 !ncreased 10oreign +irect !nestments2 0+! 9 17egional Economic !ntegration2 7E!

attracts 0+! from member countries ; non-member countries due to larger markets ;

production Efficiency in production 9 increased specialization based on law of

comparatie adantage.

8 !ncrease in market size 9 achiee high production leels - economies of scale.

8 !ncrease in bargaining power of member nations with non-participating nations 9 gain

better terms of trade, lower prices of imports from non-members ; higher prices for

their e#ports.

8 !ncreased security 9 network of countries to build trust ; reduce chances of war,

terrorism ; conflict

+isadantages

=ock of domestic reforms 9 7E! allow goernment to implement welfare policies but

may be incompatible in the absence of 7E! e.g. remoe trade barriers due to trade

shocks confiscation of foreign inestment

/egotiation reuired high resources 9 7E! agreements are retour intensie and

opportunity costs of deoting resource to regional as opposed to multilateral

agreements

=ocal firms face stiff competition especially import substitude due to remoal of tariffs

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.une 2012 Question / Part B

a) Explain with an example, what is stereotpe& ( marks, hapter 2)

)tereotypes are characteristics ascribed to groups of people inoling gender, race, national

origin and other factors. These characteristics tend to be oersimplifications of the groupsinoled, howeer. 0or e#ample, someone who meets a few indiiduals from a particular

country and finds them to be uiet and resered may spread the word that all citizens from

the country in uestion are uiet and resered.

A generalization such as this doesn3t allow for diersity within groups and may result in

stigmatization and discrimination of groups if the stereotypes linked to them are largely

negatie. That said, een so-called positie stereotypes can be harmful due to their limiting

nature.

0or e#ample, a stereotype iew from others races towards 4alay is that, they said all 4alays

are lazy, but the real reality is not all 4alays are lazy, but actually the attitude of each others

are different from each other. There are some $hinese and !ndians that are lazy too, een

more than 4alay did.

*) +isuss four () reasons wh ultural misommuniation happens&(1 marks, hapter 2)

a2 +ifferent >alues

+ifferent cultures hae different core beliefs and national traits. And this effects cross-cultural communication and international business across the board through different?

Attitudes

7eactions

E#pectations

b2 +ifferent @abits And )tyles !n $ommunication

+ifferent styles in communication can be?

+irect and indirect communication 9 such as getting straight to business in your first

meeting or only after a shared meal. E#pected or conentional niceties 9 such as wishing happy new year to eeryone you

meet for the first time between +ecember %st through anuary %st !n speech 9 such as speaking loudly or not

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Bhen you first start meeting people from different cultures this can be comical to obsere.

eople take steps back and forth, naturally ad"usting the space to what they are comfortable

with.

And if one of the two people is not at his usual distance from the other, this can effect the

whole conersation

d2 +ifferent $oncepts