Describe economic integration as well as its difficulties and benefits. Use the European Union to explain the steps for becoming an economic union.

Answer 1

When regional economies agree upon the integration then trade barriers start falling but economic as well as political coordination starts increasing. Economic integration or it can also be called as the regional integration, it is a kind of an agreement among different nations for the elimination or reduction if trading barriers and then agreeing upon the fiscal policies.

European Union itself represents complete economic integration. There are many different kinds of strict nationalists that may oppose economic integration because of the concerns over the loss of dominance.

A European Union has been established back in 1993 and at that time, it had almost 28 member states in the year 2019. Since the year 2002, 19 such nations have successfully adopted the euro as a shared currency.

Coming towards the steps that have been taken by the European Union to become one of the Economic Union.

In the area of the common market, barriers towards the cross-national movement of production factors-labors, technology and capital have been removed successfully. Here is an example of this implication that now, there is no barrier for investing in other countries like the French company can invest freely without any worries in Spain. The same is the case with workers, they can work anywhere like an Italian worker has a complete right to get a job in any country without facing any problem.

For the purpose of Trade rules, many of the customs procedures and regulations have been eliminated completely by the rationalization of logistics and transportation within Europe.

Different Technical standards, enforcement procedures, regulations and the services related to the products are being coordinated. Here is an example, Once British firms used the imperial measures (pounds, ounces, and inches) and then they have been converted to the metric systems which are being used by all of the EU countries.

Now talking about market access, many of the Tariffs and nontariff barriers were being eliminated successfully for the trading purpose in different kinds of products and services.

Benefits of Economic Integration:

Ø  Coming towards the benefits or advantages of Economic Integration, they fall into three different categories which are:

·         Benefits that are related to trade

·         Employment

·         Political co-corporation

Ø  Talking specifically economic integration leads towards the reduction in the cost of different kinds of trades, improvement in the availability of services and goods and then the wider selection among them helps in the gaining of efficiency that leads towards the greater purchasing power.

Ø  Opportunities related to the employment, tend to become better due to the trade liberalization leads towards the expansion of the market, sharing of technology and investment related to cross-border.

Ø  Corporations related to politics among countries can also improve a lot due to the stronger economic ties which are helpful in the provision of incentive to resolve a different kind of conflict in a peaceful manner and lead towards greater stability.

Costs or disadvantages related to Economic Integration:

Ø  Despite all the benefits related to Economic Integration, it also has some of the costs and such costs fall into two different categories.

Ø  The first one is the Diversion of Trade, this trade can be diverted from the nonmembers to the members whether it is economically detrimental for the member state or not.

Ø  Erosion of the National Sovereignty, in this case, different kind of members in the economic unions are specifically required to adhere towards the rule related to the monetary policy, trade and the fiscal policies which are being established by the unelected outside policymaking body.

Ø  Economists and policymakers both of them believe in this that integration leads towards the significant benefits. There are many kinds of institutions that attempt to measure the extent of degree towards economic integration across the different countries and regions.

Describe the similarities and differences of common law and civil law, and explain how inadequate or underdeveloped legal systems pose a risk for international businesses.

Answer 2

 Difference between the common law and civil law:

Common law also called the case law, it is one of the legal systems that has been created in England and then started spreading in the United States, Australia, and also some of the former members of the British as well. The start of this common law is the custom, some of the old previous cases as well as some of the legal precedents that have been set by the Nation’s Court by the process of interpreting the statutes, past rulings and legislation as well. The national legislature in some of the common law countries like Parliament in Britain and Congress in the United States holds up the ultimate power to pass on the new laws or amendment of the previous laws according to the present conditions. In a country like the United States, it is much difficult to change the constitution. Supreme Court and many of the lower courts as well have much of the flexibility in the interpretation of the laws. Common law is way open to interpret through the courts and it is much flexible than the other legal systems. Many of the judges no doubt in the common law system have a complete power to interpret the laws which are being based upon the unique circumstances of the cases depending upon the individual that includes the disputes of commercial and many of the other business situations.

Civil law is also being called by the name of code law which is found in Germany, France, Italy, Turkey, Latin, and America as well. This law was being initiated in the Roman. This Civil law completely relies upon all of the inclusive systems of the laws that have been codified in a proper way. All the laws which are about to be used are written clearly and accessible as well. These are further divided into three different codes:

·         Commercial

·         Civil

·         Criminal

Civil law is complete as an outcome of a catch-all the supplies which are being originated inside the Law already. Different kinds of principles from the starting point for administering justice and legal reasoning are all already present there. All the rules that have been set already help to start emerge as the particular codes and laws of behavior that are being produced through the Legislative body.

Both of the above-mentioned laws, common and civil law both of these were originated in Western Europe. The main difference which lies among both these two systems is that the common law completely relies upon the court decisions while the civil law is being based upon the laws by the local as well as national legislatures.

Now coming towards the four major defensive motives, they are completely relevant and need to be given importance as they carry much importance.

1.      The very first thing which carries importance is National Security. There are many of the countries that impose different terms and conditions or one can say restrictions as well on products that are being viewed as the critical thing for national security and defense. All these things include the computers and military technologies that play a part in the maintenance of domestic production in the security-related products.

2.      National culture and identity also play equal importance. The government can impose the different barriers related to the trade to confine the importations of different kinds of services and the goods for the threatening of national possessions. In a country like America, different experts opposed Japanese investors' buying of the Seattle Mariners baseball team because it has been viewed as a part of the national heritage. France is a country that doesn’t allow the significant foreign possession of its TV stations due to the concerns related to the foreign influence towards the French culture.  

3.      Protection of the National Economy, there are many of the advocates who argues that many of the firms in different advanced economies can’t contend with all those in the developing countries firms in advanced economies cannot compete with those in developing countries that give services to the low-cost labor. There are many of the Protectionists that ask or demand the barriers related to curbing the import of such products which are low in their prices. The main action is to secure the jobs and make sure that pays are high enough for the different workers in the advanced economies.

4.      In an emerging industry, there are many kinds of companies that are not well trained or have enough of the experience already, they may also lack some of the latest technologies. Along with all such things, they may also lack the large-sized typical of the competitors in all the established industries which are being settled abroad. Any kind of industry which is young and mature needs a temporary kind of protection from many of the foreign-based competitors. The government may also impose temporary based barriers on all the foreign imports to make this thing sure enough that young firms do share a large gain of all the domestic market.

Explain risks to the internationalism of business “international business”, international trade and global sourcing. Who are the participants in International Business? Use examples.

Answer 3

In every kind of business there lies a list of different kinds of risks and the same is the case with international businesses, there is not just one or two risks that are being associated with the International business but it includes many and the list is being provided below. Let’s talk about them in detail.

1.      Country Risk or hazard: It is one of the most common and major risks that is being associated with international business. Country hazard is publicity to capability loss or adverse results on corporation processes and effectiveness because of trends in the politics of the country and/or legal eras. It is being also called a political hazard, it's far one of four major forms of the risks associated with international business. Government intervention and limitations to exchange and funding are specifically exquisite in worldwide enterprise. Any kind of the mismanagement of the countrywide financial system can lead to economic crises and inflation. All these activities mainly arise from enterprise cycles, a faulty regulatory environment, or inequities within the fundamental financial of the host country.

2.      Political Risk: A political system is a complete set of different kinds of formal institutions that represent authorities. They include different kinds of law-making bodies, parties associated with politics, lobbying corporations, and trade unions. The basic and primary function of a system associated with politics is supposed to give protection from any kind of the external threat, set up of the stability that is being primarily based upon the laws and governs all the of valued resources many of the individuals of a society. The politic device is the one that defines or tells that how such organizations interact with one another. The political device of every country is unique, that is being evolved within a certain historical, economic, and cultural context. There are many of the Political systems that are being evolved constantly in reaction towards the demands of constituent and the development of the wide country along with the Global environment. The constituent is something about people or any of the organization that is of much supportive towards the political device and it also receives the resources associated with different authorities.

Some examples for the country and political risk that might be appeared for the international business is:

Nationalization of deprivation:

Nationalization which defined as a process in which a government of a country takeover some privately-owned businesses, companies along with all of the resources whether with or without recompense. Nationalization is actually a part of a political risk that could make it complicated or even impossible for international businesses to place their invests in a particular country where industries are uncovered to this type of risk.

Some real-life examples we can see from the previous governments which have nationalized exceedingly profitable industries with the reason that the business does not need any foreign ownership of its valued assets in 2006, where the Bolivian government was nationalized the oil as well as natural gas industries in the country. In the same way, in 2007 the Government of Venezuela was declared to nationalize the companies in two main segments of the country’s economy which mentioned as telecommunications as well as electricity. Not only had this, in November 2009, the president of Venezuela has declared that he would also nationalize the banks' sector in the country (Purcell, 2013).

  Currency Risk: Fluctuations in the currency of foreign countries can give huge profits while converting it back into the home currency. Know about the risks as well as the rewards while making an investment in some other country. Currencies in the countries of all the stable Governments are much less volatile as compared to those of the less developed countries. A strategy being called by the name of Hedging can mitigate some of the high risks being associated with the currency. Any kind of sudden change in the monetary policy in the future will for sure affect all the currency rates.

A real-life example of this risk can be seen in the case of Cuban peso. In order to protect all of its people from alleged capitalist penetration, correspondingly the local regulators might deliberate foreign currency convertible with the main purpose to secure the domestic investors from wicked investment decisions, which are currency hyperinflation (Orro, 2008).

Explain the limitations of early trade theory and the significance of born global firms. Use examples.

Answer 4

International trade theories are somehow are considered to be very different kind of the theories which are helpful in the explanation about the international trade. Trade is the word that is being used to describe the trend of exchanging different kinds of goods and services as well among the two different peoples of entities.

Trading is being used because people believe that they can gain profit or have benefited from the process of exchange. Many people think that trading can be done easily but obviously it requires a lot of effort and struggle. Trading is linked with many of the different kind of theories which can be applied according to the situation, goods that are required to trade or depends upon the country.

Trading is of two types, one is between the same country like in different cities and the second one is the trading among different countries.

As already talked above that everything does have benefits and the same is the case with trading, it carries much importance, profit can be obtained, the value of a country can be increased, people can know about the things in a proper and good way. But along with all the list of benefits, they do have some of the limitations as well which one should always think about carefully.

Before starting this trade process, one should be ready for every kind of situation. As it is related to the people and countries, so things which are being used for trading must be of very high quality as people or other countries would only ask for the goods again when they feel satisfied and happy after using them.

There is no doubt in it at all that trading is one of the best methods to invest money and making future secure but one needs to be efficient enough and always know about the tricks that carries much of the importance and can make a person able to gain enough of the profit in future.

For example, the international business that runs in the United Kingdom perform trade transactions which are facilitated by the method of international financial payments, whereas the private banking networks along with the central banks of the trading country are definitely playing significant roles (Wonnacott, Robinson, Bertrand, & Balassa, 2019 ).

References Use the European Union to explain the steps for becoming an economic union

Orro, R. (2008). The Cuban dual monetary system and challenges ahead. Cuba in Transition, 44-49.

Purcell, T. F. (2013). The political economy of social production companies in Venezuela. Latin American Perspectives, 146-168.

Wonnacott, P., Robinson, R., Bertrand, M. A., & Balassa, B. (2019 , November 1). International trade. Retrieved from https://www.britannica.com/topic/international-trade#accordion-article-history