 |
|
 |
trading blocs
|
Below is one of our free research papers on trading blocs. If the term paper below is not exactly what you're looking for, you can search our essay database for other topics.
The introduction of a single currency and monetary union in a free trade area has its benefits but unfortunately it also has its drawbacks. Trade blocs are forms of economic integration where members remove any trade barriers which they may have among themselves, but they get to keep their financial and economic independence such as their labor and capital. Trade blocs are represented mainly by custom unions and free-trade areas. Examples of a trade bloc would be NAFTA (North American Free Trade Association which consists of Canada, United States and Mexico), MERCOSUR (Mercado Comun del Cono Sur which consists of Brazil, Paraguay, Uruguay and Argentina), EU (European Union, which is the world’s largest trading bloc) and ASEAN (Association of Southeast Asian Nations which consists of Vietnam, Cambodia, Malaysia, Thailand etc: (ucatlas.ucsc.edu/home.html)
A single currency is not needed in order to have better trade. NAFTA for example has no fixed exchange rates and no single currency but they are still trading both visible and invisible goods with a satisfying amount. The benefit from joining a single currency would be that the exchange rate will not affect your terms of trade. What I mean is that, if you don’t have a single currency and you trade with another country then the exchange rate may really affect you because the amount may be higher for when you import. For example, UK’s trade is mostly with countries outside the EU such as the US and so the UK may suffer ...
|