![]() ![]() 1999).Īmong the most notable and impactful of these trade arrangements include the North American Free Trade Agreement (NAFTA) and the European Union (EU). As of February 1999 the GATT/WTO has been notified of 184 regional trade agreements of which 109 are currently in effect (see WTO 1999 web page).' These regional trade groups, according to Fred Bergsten of the Institute for International Economics, account for approximately 60 percent of world trade (Anon. The World Trade Organization (WTO), for example, notes that almost all of its 134 members are signatories to regional trade agreements with other countries. Since the mid-1980s there has been a profound change in the structure of the international economy due to the widespread growth and internalenhancement of regional trading blocs in all parts of the globe. policy fosters the development of both multilateral liberalization trade and preferential trade agreements. to move away from its policy of supporting only multilateral trade negotiations as a mechanism for encouraging free trade. However, multilateral trade negotiations in the 1980s were slow and tedious, thus leading the U.S. In order to develop a comprehensive model, it is first incumbent to examine a short history of what has actually occurred in the area of regional trade bloc formation.įor years the champion of multilateralism was the United States. A multidisciplinary approach is taken that first examines the effects and formation of regional trade blocs from the business, international economics, and political economics literature. The purpose of this paper is to: (a) develop a conceptual model to recognize the existence of regional trade blocs (b) explain the manner in which they can exist, and (c) examine the conditions under which they may be formed successfully. Although in reality we know that regional trade blocs are prevalent, there are some that argue that, for theoretical reasons, they should not exist at all (Grieco 1990). More specifically, these trade blocs impose additional constraints on these theories. With 32 regional economic groupings believed in existence today (Czinkota, Ronkainen, and Moffett 1999), an unusual diversion of trade is created unlike what is expected from international trade models such as Porter's Diamond (Porter 1990), Eclectic Theory (Dunnig 1977, 1979, 1988), Internationalization Theory (Johanson and Vahlne 1977), and Internalization Theory (Buckley 1988). However, there is little research on why and how regional trade blocs form at all. In essence, these trade blocs are designed to create less restrictive trade between members, while also increasing or standardizing trade restrictions with non-members. One of the more interesting developments since World War II has been the formation of regional trade regimes. While the effects of culture have been studied extensively (e.g., Terpstra and David 1991 Barkema and Vermeulen 1997), there is minimal research on the theoretical underpinnings of trade barriers. Perhaps second only to culture, governmental trade restrictions have the greatest impact on the success or failure of international business. examine the conditions under which they may be formed successfully. explain the manner in which they can exist, and 3. develop a conceptual model to recognize the existence of regional trade blocs, 2. Governmental trade restrictions have the greatest impact on the success or failure of international business. ![]() ![]() His research has appeared in such journals as Journal of Marketing and Journal of Applied Business Research. Chip Miller is Associate Professor of Marketing, Pacific Lutheran University, Tacoma, WA. Recent publications are found in such journals as Journal of Marketing Education and Journal of Education for Business.ĭr. McCorkle is Professor of Marketing, Southwest Missouri State University, MO. His publications have appeared in such journals as Journal of Marketing.ĭr. Kling is Associate Professor of Marketing, University of Northern Colorado, CO. Besides his numerous articles, he is the co-author of a management book.ĭr. James Reardon is Wells Fargo Professor of Marketing, University of Northern Colorado, CO. The Formation of Regional Trade Blocs: A Theoretical Perspective Using Game Theoryĭr. ![]() Formation of Regional Trade Blocs: A Theoretical Perspective Using Game Theory, The ![]()
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