Question

Some groups of nations are forming blocks, like North America or Europe. Are regional trade blocks good for global trade or not? Support your argument.

Answer 1

Regional trade blocks are a group of countries that comes together as a group and they protect themselves from imports of non member countries. It is just like economic integration. Examples of regional blocks are SAARC, ASEAN, EU etc. When countries form regional trade blocks, the following benefits or advantages can enjoy. They are :

a. There is larger availability of variety products at competitive prices.

b. It allows unrestricted flow of labour within the region which can maximise employment and income level of member countries.

c. Cooperation among member countries increase the easier availability of capital and leads to technological changes. As a result they can increase the qualitative improvement in their production.

d. It creates economic efficiency by increased competition among member countries.

e. It promotes capital and labour( factor) mobility among the member nations.

f. It also leads to higher standard of living among its member countries.

Trading blocks have greatly influenced the world Trade. Because it eliminates trade barriers among member countries and allow free trade between geographically socially culturally United Nations.this can leads to lower prices, large economies of scale, greater production and economic efficiency . Therefore Regional trade blocks are good for international trade.