NARRATIVE
CHAPTER 10 EUROPE, AFRICA, AND THE MIDDLE EAST
Global Perspective
MIGHT FREE TRADE BRING PEACE TO THE MIDDLE EAST?
After World War II, both Democratic and Republican administrations pursued trade
expansion as a key component of America's Cold War strategy. Trade aided development in
postwar Europe and Japan, as well as solidified allies' relationships. War is virtually
unthinkable among Europe's major powers today, owing to the trade and investment ties
that bind their people together. The events of September 11th and their aftermath have
once again demonstrated the interdependence of trade and foreign policy. That link
between trade, security, and foreign policy will dominate the agenda at this weekend's
historic economic forum in Amman, Jordan.
The nearly total destruction of continental European economies by World War II posed a
serious threat to the stability of Europe's social and political institutions. Europe's leaders
recognized that rebuilding from the ruins would be difficult and that it was critical to
establish new types of international institutions in order to ensure prosperity, stability, and
peace in the world region.
Jerusalem is at the core of the issue. Many people believe in the holy Old City. Christians
regard it as sacred because of its associations with Christ. It has served as a focal point for
Jews not only on a national scale, but also, and perhaps more importantly, on a personal
level. In terms of religion, only Mecca and Medina are more spiritually significant to Muslims.
There's also the debate over whether its spiritual events are represented by perpetual real
estate.
The evolution and expansion of multinational market regions—those groups of countries
seeking mutual economic benefit from lowering interregional trade and tariff barriers—are
the most important global trends today. The organizational structure of multinational
cooperation varies greatly across market regions, but the universal goals of multinational
cooperation are economic benefits for participants and the associated peace between and
within countries.
Regional economic cooperative agreements have existed since the end of World War II,
with the most successful example being the European Union (EU), the world's largest
multinational market region and the most prominent example of economic cooperation.
Multinational market groups form large markets with potentially significant international
business opportunities. When it became clear in the late 1980s that the European Union was
on track to achieve its long-term goal of a single European market, there was a surge in
interest in economic cooperation, with the formation of several new alliances. The North
American Free Trade Agreement (NAFTA) and the Latin American Integration Association
(LAIA) in the Americas, as well as the Association of Southeast Asian Nations (ASEAN), are
examples of regional trade agreements (ASEAN)and Asia-Pacific Economic Cooperation
(APEC) in the Asian-Pacific Rim are all relatively new or revitalized associations that are
growing in strength and importance as multinational market regions.
Concerns about the impact of globalization have grown in tandem with the growing trend of
economic cooperation. Such collaboration on global competition is gaining traction.
Governments and businesses are concerned that the European Union, NAFTA, and other
cooperative trade groups will devolve into regional trading blocs with no internal trade
restrictions but protected borders from outsiders. However, as each of these trade
organizations continues to forge new agreements with other countries and organizations,
the networked global economy and free trade are clearly on the rise. The benefits are
obvious for consumers; however, global companies face more prosperous and intensely
competitive environments.
LO1
THE REASON FOR ECONOMIC UNION
Successful economic union requires favorable economic, political, cultural, and geographic
factors as a basis for success. Major flaws in any one factor can destroy a union unless other
factors provide strength to overcome weaknesses. Many of the associations formed in Africa
and Latin America have had little impact because perceived benefits were not enough to
offset partial loss of sovereignty.
Economic Factors
As a fundamental orientation, every type of economic union shares the development and
expansion of market opportunities; typically, markets are expanded through preferential
trade agreements. Countries with complementary economic bases are less likely to
experience friction. In the creation and operation of a unified market unit. However, in order
for an economic union to survive, agreements and mechanisms for resolving economic
disputes must be in place.
Politicl Factors
Political amenability among countries is another basic requisite for the development of a
supranational market arrangement. Participating countries must have comparable
aspirations and general compatibility before surrendering any part of their national
sovereignty. It can have an effect on a business by making the market environment more or
less friendly to that business. Governments typically wield a great deal of power over
businesses, and there is often little that businesses can do about it.
Geographic and Temporal Proximity
One of the European Union's first major strengths was its transportation network; the
opening of the tunnel between England and France further bonded this common market.
Countries that are geographically separated from one another have major obstacles to
overcome when attempting economic fusion However, with increasing efficiencies in
communication and transportation, the importance of such factors appears to be dwindling.
Cultural Factors
The shock of economic cooperation with other countries is lessened by cultural similarities.
The more similar the cultures are, the more likely an agreement will be reached. It is likely to
succeed because members are aware of their colleagues' perspectives and outlooks.
LO2
Patterns of Multinational Cooperation
There are five fundamental groupings for regional economic integration.
1. Regional Cooperation Groups
It is the most basic economic integration and co-operation. It also refers to one or more
units of local government agreeing to work together to provide or share a public service,
operate a public facility, or plan for their futures
2. Free Trade Area
It is an agreement between two or more countries to reduce or eliminate eliminate customs
duties and nontariff trade barriers among partner countries.
3. Custom Unions
It is the next step in economic cooperation. It benefits from reduced or eliminated
internal tariffs in the free trade zone and imposes a common external tariff on products
imported from countries outside the union.
4. Common Market
The agreement eliminates all tariffs and other restrictions on internal trade, establishes
a set of common external tariffs, and eliminates all restrictions on the free flow of capital
and labor among member countries.
5. Political Union
It is the most comprehensive form of regional cooperation. It entails total political and
economic integration, which can be voluntary or enforced.
LO3
The evolution of the European Union
European Integration
The European Union is the most secure in its cooperation and the most important
economically of all multinational market groups. From the beginning, it has made strides
toward complete economic integration and, eventually, political union. Many people,
including Europeans, believed that the European Economic Community, or European
Common Market, would fail due to the problems that integration would create and the level
of national sovereignty that would have to be given up to the community.
EU institutions
The European Union’s institutions form a federal pattern with executive, parliamentary,
and judicial branches: the European Commission, the Council of Ministers, the European
Parliament, and the Court of Justice, respectively.
Their decision-making processes have legal status and extensive powers in fi elds covered by
common policies. The European Union uses three legal instruments:
(1) regulations binding the member states directly and having the same strength as national
laws;
(2) directives also binding the member states but allowing them to choose the means of
execution;
(3) decisions addressed to a government, an enterprise, or an individual, binding the parties
named. Over the years, the Union has gained an increasing amount of authority over its
member states.
LO4 Evolving patterns of trade as eastern Europe and the former Soviet
states embrace free-market systems
The former Soviet Union's satellite countries which is Eastern Europe
and the Baltic republics, share a lot of things in common towards postcommunist market reforms. These countries, have not all achieved the same
level of advancement of success in terms of economic growth and reform. In
Eastern Europe, the shift can be guided mostly by the spontaneity of
innovative market forces by moving swiftly rather than by government
planners. Nations that took the slow path, allowing communist officials to
continue their work. On the other hand, Baltic states has three countries of
Estonia, Latvia, and Lithuania which are the good instances of how the proper
policies can make a difference. Inefficient industries and command economy
in the Soviet type were the foundations of all three countries' beginnings. All
three Baltic countries are WTO members. There is no central authority in The
Commonwealth of Independent States (CIS), which is a loose economic and
political association with open borders. The CIS's 12 members all have a
history of central planning in common. The transition to a market economy
could be made easier if they work together closely. They may fall apart as a
result of disagreements over economic policies, currency reform, and military
authority. The CIS isn't going anywhere, but it hasn't yet solidified to the point
where it can't be taken apart on having a long-term goal and a stable
membership. Russia has shown newfound energy under Vladimir Putin which
is a free trade zone.
LO5 Strategic implications for marketing in the region
The world into market groups has an impact on production, financing,
labor, and marketing decisions. As businesses become stronger and more
experienced in dealing with large market groups, the overriding message to
the astute international marketer remains opportunity and profit potential. As
businesses get stronger and more skilled in dealing with huge market
groupings, global competition will continue to grow. Despite the difficulties and
complications that come with dealing with new markets, the most important
point is the intelligent international marketer continues to have a lot of
potential for profit. Because of the economies of scale and marketing
efficiency that may be realized in large markets, enterprises used to mass
production and distribution are particularly significant. A multinational market's
first goal is to protect enterprises that operate within its borders. Companies
willing to invest in production facilities in global markets, on the other hand,
may benefit from trade restrictions because they become a part of the market,
weakening exporters significantly.
LO6 The size and nature of marketing opportunities in the
European/African/Middle East regions
The first purpose of a global market is to ensure that businesses
operating within its borders are protected. Trade restrictions, on the other
hand, may benefit companies willing to invest in production facilities in global
marketplaces because they have become a part of the market, greatly
reducing producers. One of the necessary modifications to avoid the problem
of parallel imports will be price harmonization among country markets. Price
differences are considerably easier to identify now that the euro has been
adopted, and consumers can readily find the greatest deals on brand-name
products. company's uniform pricing strategies are minimizing the amount of
they focus on marketing and promotion activities with the brands they create.
Small and micro businesses are not supported by a well-integrated and
dynamic distribution system in Europe. Multinational market groups and their
marketing ramifications from the point of view of companies that are either
inside or outside the market and wants to sell. It gives enormous opportunities
for the creative marketer, regardless of their location. The regions of Europe,
Africa, and the Middle East have some of the most diverse economic levels
and civilizations, posing a significant challenge for global marketing managers
with regional responsibility.