Transcription
Everyone, how are you all? Welcome to ID in Feud and B Prime Academy. As you all know, our series on International Business is ongoing. Unit number one, two, and three have already been completed. From today's video, we will start unit number four. And whoever wants to purchase notes, you know that for ₹160 only, you can purchase our notes from Telegram. And the Telegram link will be available in the description box, i-button, and pinned comment. You can message there and purchase the notes. Okay? And before the video starts, please like the video and subscribe to the channel. Unit number four will be Regional Economic Integration and International Economic Organizations.
Now, the first topic that comes under this is Forms of Regional Economic Integration. So, the meaning of Regional Economic Integration is that countries in a region come together to reduce trade barriers and promote economic cooperation. That is, there is a region. For example, this is Asia. Within Asia, we have many countries like India, Pakistan, China, etc. All these things come under Asia. So, when all these countries meet, sit together, and talk about removing our trade barriers, meaning reducing them. That is, we will reduce the obstacles between our countries in doing business. And we will increase economic cooperation. That is, all countries together will help each other grow their economies. This is called Regional Economic Integration. That is, countries cooperate. Countries work together so that they can trade, so that they can do business with each other. They can do business with each other very easily and grow their businesses. They can develop their economies. This is called Regional Economic Integration.
Now, there are different forms of integration. There are different ways. So, what are those ways? The first one is Preferential Trade Agreement, which is called PTA in short. That is, here, countries give special preference to each other. That is, lower tariffs. For example, a deal was made between India and China. A PTA was established between them, a Preferential Trade Agreement was made, that whatever goods go into India from China will have less tax, and whatever goods come into India from China will also have less tax. Okay? That is, here they did not remove trade barriers, but they reduced the tax. The tariff that was being applied was reduced. This will be called a Preferential Trade Agreement.
After that comes our Free Trade Agreement, FTA, as it is called. That is, the member countries remove tariffs among themselves. That is, a deal was made between India and China. They said that this time, instead of reducing taxes, let's remove taxes completely. Neither you will charge us tax, nor will we charge you tax. Whatever goods are coming from our side, whatever goods are going to your side, neither you will charge tax on them, nor will we charge tax on them. This is called FTA, Free Trade Agreement. That is, here, each country has its own trade policies with non-members.
The third thing is our Customs Union. That is, there will be no tariffs among the member countries. That is, they form a customs union. Three or four countries come into this. For example, India, China, and Bangladesh. Three countries come. They form their union, and here they decide that none of us will charge any tariff from anyone. No one will charge tax from anyone. And a common external tariff for non-members. And all three of us, if we import goods from any other country, whether it comes from Dubai, America, or anywhere, if we import anything from anyone, we will do it at the same tariff. For example, if the tax is 5%, then you also charge 5% from them, and we will also charge 5% from them. This is called a Customs Union.
Now, next comes our Common Market. What happens in a Common Market? There is free movement. That is, goods, services, labor, and capital can move easily from one place to another. When goods, services, labor, and capital move easily from one country to another. This is called a Common Market.
There is our Economic Union. That is, if we add all the common economic policies of both countries to the Common Market, where there is free movement of goods, services, labor, and capital, then our Economic Union is formed. Okay? And it is possible that the currency of these two countries is also common, or similar.
After that comes our Political Union. This is the biggest power of integration. That is, Political Union comes at the very top. And here, countries start sharing their political power with each other. Okay? This is called Political Union. So, for easy flow, you will understand that at the top will be PTA, then FTA, then Customs Union, then Common Market, Economic Union, then Political Union. This is how our flow works.
Now, next comes our topic, Integration Efforts in Different Regions. That is, what efforts have been made for integration in different regions. Okay? So, we will look at each one by one, what efforts have been made in which regions. First comes our Europe. In Europe, what has been created is Europe, which is a whole region. In Europe, a EU has been created, that is, the European Union has been created. So, the EU is a group that includes all the European countries that work together for their economic and political cooperation, so that their economy grows and their politics also becomes strong. So, all these countries work together. This is called the European Union. So, its specialty is that there is free movement of goods, services, labor, and capital. That is, among all the European countries, goods, services, labor, and capital can be easily transferred from one country to another. Their movement can be easy. And there is a common currency. That is, the Euro is one such currency that is used in most of the European countries. So, their currency is also common. And policies are also common. That is, the rules, regulations, and laws made by the government are the same everywhere.
After that comes our Objectives. What are the objectives? Here, this thing is promoted that there should be peace and stability. Peace should be maintained along with stability. Among all the countries in the European region. And the second point is economic growth. And the third point is that the global position of all of Europe should become good. That is, Europe should stand out in the whole world. And an example would be that now, all the countries that will come under the European Union will have no trade barriers among them. That is, there are no obstacles to doing business among those member countries.
And the second one is North America. What has been created in North America is the United States-Mexico-Canada Agreement. Its short form is USMCA, the United States-Mexico-Canada Agreement. So, USMCA is a trade agreement. That is, a business agreement. Between which countries? Between three countries. USA, Canada, and Mexico. Between these three countries, which are in North America. This agreement has been made between the three of them, USMCA. Its specialty is that there is free trade here. Among the member countries, that is, between the USA, Canada, and Mexico. There is free trade among all three countries. Goods can move easily. And tariffs are low here. If some goods go from the USA to Canada, from Canada to Mexico, then lower tariffs are applied there. Taxes are less. Taxes are not that high. And the rules for investment and labor will be followed the same way in all three places. The objective is that the trade between all these three countries should increase. Okay? Business should increase, and economic cooperation should increase. Economically, all three countries should work together. These are the objectives. So, an example is that goods are being easily sent from the USA to Canada. They are being sent from Canada to Mexico. They are being sent from Mexico to the USA. So, this is how this agreement works.
Now, after that comes our Asia. In Asia, we have SAARC. The full form of SAARC is South Asian Association for Regional Cooperation. So, SAARC is a group of South Asian countries. That is, it is a group of all the countries that come under South Asia. That is called SAARC, and they promote regional cooperation. They promote this thing, regional cooperation. Okay? Who are the members of SAARC? India, Pakistan, Bangladesh, Sri Lanka, Nepal, Bhutan, Maldives, Afghanistan. So, all these things come under Asia. So, these eight countries are members of SAARC: India, Pakistan, Bangladesh, Sri Lanka, Nepal, Bhutan, Maldives, and Afghanistan. Okay?
Now, what is the objective? The objective is economic growth. All these countries should grow together. Social development should happen in every country. And regional peace should come. That is, peace should be maintained throughout South Asia. This is our objective. And its shortcomings are political conflicts. That is, among every country. India has a dispute with Pakistan. Pakistan has a dispute with Bangladesh, and then Bangladesh has a dispute with Sri Lanka. So, disputes keep happening from one place to another. Political conflicts keep happening. Because of which SAARC has not been very successful.
Now comes our Asia. In Asia, we have ASEAN. The full form of ASEAN is Association of Southeast Asian Nations. Okay? So, ASEAN is a group of Southeast Asian countries. All the Asian countries that come under Southeast Asia form a group called ASEAN. And the one above was of South Asian countries. Okay? And here we have Southeast Asian countries. Okay? And all the countries here work for economic integration and cooperation. As you all know. And who will be our members here? Among SAARC, Indonesia, Malaysia, Thailand, Singapore. These four will be our members. So, what are the features? What are its specialties? There is a Free Trade Agreement. That is, here, trade among these countries is free, meaning they can do business with each other easily. And there is economic cooperation, meaning these countries work together so that the economy of every country grows. And besides this, the third point is growing global presence. That is, the global presence of these countries is also increasing, and this thing is also increasing a lot nowadays. And the objective is that its purpose is to increase trade among these countries, increase businesses, achieve economic growth for every country, and bring stability to the region, meaning stability should be maintained throughout Asia.
Now, the third point is the importance of Regional Economic Integration. Here, trade increases among member countries. If this Regional Economic Integration is done, then business increases among all the member countries. And the second point is reduced cost of goods. That is, the cost of goods, the expense, is reduced. And investment is encouraged, so that one country invests in another country, which benefits the investing country, and the country where the investment is made grows. And economic growth is also promoted here, so that the economy of every country grows and moves forward. Okay? And it is done to strengthen the global position of every country in the whole world, to strengthen the global position. And the shortcomings of integration are these. First of all, there is a great loss of national sovereignty. And there are unequal benefits among countries. That is, some countries will benefit a lot, and some countries will not benefit at all. And political conflicts also happen. As I mentioned above, it is related to SAARC. In SAARC, there is India and Pakistan, and there is a political conflict between India and Pakistan. So, how can they work together? Okay? So, these are the things. And there is dependence on other countries. That is, you have decided to do this integration and thought that your dealings will be with this country. Okay? Now, you are importing goods from there, and you have become dependent on them. Now, you are not making anything yourself. You are just importing goods from them. For example, if there is a political conflict between you and that country. For example, India. India and Pakistan. Now, some goods are being produced in Pakistan. And there has been an integration with Pakistan, so that these goods will be imported into India. Okay. Now, these goods are being produced and coming from Pakistan to India. Now what happened? A political conflict occurred. There was a war between India and Pakistan. Now, after the war, what happened? When these goods were coming, Pakistan stopped sending these goods. So, now our dependence on them increased. Okay? Because these goods used to come here, and we did not set up any manufacturing. So, you can understand this by taking any country as an example. I have given this as an example. Okay? This has nothing to do with real life. So, just so that you all understand.
Costs and Benefits of Regional Economic Integration. That is, how much does it cost, and how many benefits are there for the Regional Economic Integration that is done. Okay? So, here again comes the definition of Regional Economic Integration: countries work together so that their trade barriers are reduced, and they work with economic cooperation. So, it has benefits, and it also has disadvantages. That is, it will cost you a lot, and you will have to pay a lot in return, even if there are benefits. So, let's first look at the benefits. What are the benefits of Regional Economic Integration? The first point is trade creation. That is, here, tariffs are removed. Whenever a deal is made between two countries, taxes are removed. Because of which business increases. When taxes are removed, and you don't have to pay tax, you just have to do business, then obviously, business among the member countries will increase. Business among them will grow. And countries will start buying goods from efficient producers within the group. That is, within a group, for example, there are three countries: A, B, C. Here. Now, C needs goods. It needs G. C needs a good. Now, it will see if it is cheaper from A or from B. If the cost of a good from A is ₹5 and the cost of a good from B is ₹6, then what will C do? It will start ordering from A. And so, you can order goods from any efficient producer in the group. Because of which there is better use of resources. Your money is spent in the right place. Even if you order 1 lakh goods, you save ₹1 per unit, and your ₹1 lakh is saved.
Second comes lower prices for consumers. That is, when goods are coming to you cheaply, then obviously, you will sell them cheaply to customers. If there are no tariffs, then goods will be cheaper. For example, if something costs ₹500, which comes from abroad. Now, if there was a 20% tax on it, it would become ₹600, and then after adding profit, it would be sold for ₹800. Now, there is no 20% tax. Now, it is coming for ₹500, so it will be sold for ₹600-700 in India. Okay? So, goods have become cheaper. The same thing, which was ₹800, has become ₹600-700, so it has become cheaper. And competition will increase. Due to competition, quality will improve. Whenever competition increases, that A is also making the same thing, and B is also making the same thing. Then A will try to improve itself to be better than B, and everyone will come and buy from A. So, everyone will try to improve their quality so that things are bought from them.
The third point is increased market size. Increased market size means that businesses get access to larger markets. That is, earlier, we were doing business only within our own country. Now, what can we do? Now, we can do business with other countries in the region, because trade barriers have now been removed. And we can sell a product that we are making in our country in many countries. It's not that we can sell it in only one country. It can be sold in many countries.
The fourth point is economies of scale. That is, large production reduces cost per unit. That is, whenever production is done in a large quantity. You see, whenever you buy something wholesale, it will be cheaper, and an individual unit will be more expensive. If, for example, you buy something wholesale, then per piece it might cost you ₹5, and the same thing might cost you ₹10 if you go to buy an individual unit. In this, what happens is that the larger the production, the lower the cost per unit. The less our expense. The more things we make, the more things we sell, the less our expense becomes. And firms become more efficient. When firms become
They will start working on a large scale, they will start doing business on a large scale, then they will become efficient. They will work in a better way. Okay? And after that, our next point comes, which is increased investment. Increased investment means that FDI, which is Foreign Direct Investment, is attracted into your country, meaning that your neighboring countries invest money in your country. And what happens because of investing money in the country? Money comes into your country, and your country develops, and investors prefer large integrated markets. They prefer large markets that are integrated with each other, intertwined with each other, so that everyone benefits. Next comes our better resource allocation. This means that countries that specialize in certain goods produce them best. For example, if a country is good at textiles, it will sell textiles to other countries, which will improve its efficiency. The seventh point is economic growth. This means that trade increases, businesses increase, and investment increases. Okay? Businesses are growing, and investment is being made in other countries, which leads to increased growth, and all countries grow together. The eighth point is employment opportunities. This means that when industries grow. Industries grow, like when MNCs opened in India, you see in Noida, Gurgaon, etc., jobs are created for people. On each floor, there are jobs for thousands of people. So, when this socio-economic regional economic integration happens, our jobs increase. Okay? And the ninth point is political cooperation, which reduces the chance of conflict. For example, India and China are dealing with each other. Now their dealings are ongoing. So, both will think that India will think that it benefits from China, and China will think that it benefits from India. This reduces the chance of conflict, of fighting. If a war were to happen between them, it wouldn't happen because they are doing business with each other. And this will maintain peace and stability. Next comes our costs. Costs mean expenses or losses incurred due to regional economic integration. So, what are the losses within this? The very first loss we will see within this is trade diversion. This means that countries might import from less efficient member countries instead of better non-members. Now, you have formed a regional economic integration, say with countries A, B, and C. Now you see that a good costs you ₹8 from A and ₹9 from C. So, A thought, "I am integrated with this. Now I will order goods worth ₹8 from it." It arrived. However, there was a country D, which was not part of your regional economic integration. And it was selling to you for only ₹4. But you are under pressure that we have a deal with our region, so I have to buy from it. So, this is costing you more, right? And it might be that it doesn't produce things as efficiently as it does. So, you will have inefficient use of resources, meaning a loss of ₹4 per unit. Now, the second point is the loss of government revenue. The government also suffers losses. When the government removes tariffs and taxes, the government's income decreases. Now the government has reduced taxes. People think, "Wow, now our business will grow." But the government is suffering a loss because the government's main earning is from taxes, so money won't come to the government. The third point is the loss of national sovereignty. This means that all countries have to follow common rules and common policies. All three countries, A, B, and C, have to follow the same rules and same policies. Now, A's own rules, B's own rules, C's own rules, all had their own national sovereignty, which will be lost, and all will have to work under the same common rules. And there is less independence in decision-making. When any country, whether it's A, B, or C, has to make a decision about its business, they will not have the independence to make their decisions freely and independently. Now, if they are in an economic integration deal, they cannot break that deal. The fourth point is unequal benefits. This means that strong economies benefit a lot. Countries A, B, and C. Among them, A is the most powerful country, and B and C are smaller companies. So, A will benefit a lot, and B and C will not benefit as much. And weak economies will not receive equal benefits. A is benefiting greatly, while B and C are not benefiting as much. The fifth point is increased competition. This means that domestic industries might suffer. Due to foreign competition. Because of the small businesses that are already being started in our country. It might be that these businesses in our country cannot survive. Because now there is foreign competition. MNCs have opened in our country, and these small businesses have no value in front of these big MNCs. So, due to increased competition, domestic industries in our country, the industries of our country, also suffer, and small firms, those with small businesses, start closing down. The sixth point is economic dependence. This means that one country becomes very dependent on another country. Like I gave the example of India and Pakistan for goods. If there is a crisis in one country, it affects the other. For example, if India and China have a deal, and if China goes to war with another country and China suffers a loss, then India will also suffer a significant loss. For example, what is happening now? The India-Israel war is going on. I mean, the Iran-Israel war is going on. In the Iran-Israel war, India is a supporter of Israel. Now, because of being a supporter of Israel, LPG is not coming to India from Iran. So, because of this, if there is a crisis in one country, it affects another country. That is, because of Israel, LPG is not coming to India from Iran. So, this is it. India has no connection. India is just with it. So, because of that, it is also being affected. And the seventh is our adjustment cost. This means that workers might lose their jobs if uncompetitive industries emerge. If jobs that were not anticipated start appearing, like AI has come, and AI is taking jobs today, then we need retraining and relocation very much. Our employees need to be trained again and again. Taught new things. They need to be relocated. Moved from one place to another repeatedly. The eighth is our political conflicts. This means that policies are different, and the interests of each country are different. The laws of each country are different. The benefit of each country is different. So, each country looks after its own interests, which can also increase conflicts. Why? Now, trade creation and trade diversion are going to be very important concepts. So, what is the difference between the two? Trade creation means that when one country buys goods from the most efficient member country, that is called trade creation. And if we buy goods from a less efficient member country, from the least efficient one, that is called trade diversion. It has a positive effect. Obviously, when you buy efficient goods, it has a positive effect, and in trade diversion, there is inefficiency. Next comes our international economic organizations. So, international economic organizations are institutions that help manage global trade, finance, economic cooperation, and all these things among countries. This is what is called an international economic organization. Now, which organizations come under this? First is our WTO, which is the World Trade Organization. The World Trade Organization is an international organization that regulates and promotes global trade between countries. This means that all the countries in the world and the trade happening between those countries, that business, is regulated, managed, and promoted by the World Trade Organization. So, what are the functions of the World Trade Organization? The first function is to promote free trade. This means its primary function is to remove all trade barriers, which are obstacles to doing business, such as high taxes or low quotas. So, the World Trade Organization removes all these things. Second is to resolve trade disputes. This means that if there is a problem in doing business between two countries, then resolving those trade disputes is also the job of the WTO. This means that if a conflict arises between two countries, a fight occurs, and they are not doing business deals, then it is their responsibility to facilitate those business deals. The third point is to monitor trade policies. This means checking whether the countries are following all trade rules or not. Whether all the countries in the world are following the common trade rules that have been made by the World Trade Organization. The fourth point is that a platform is created here for negotiation. This means that countries come here. If countries are unable to make deals with each other, then the members of the World Trade Organization sit together and create a trade agreement through negotiation between the two countries, saying, "You adjust a little, you adjust a little," and create an agreement that benefits both countries. So, negotiating is also the job of our World Trade Organization. The fifth is to provide technical assistance. This means that developing countries, okay? They are provided help in trade matters, like India, in business matters, in trade matters, our World Trade Organization provides technical assistance. Now, what is the structure of the World Trade Organization? How are the members here, what are their functions, let's look at all those things. First, under this, we have the Ministerial Conference. This means the ministers of the World Trade Organization. First, we have the Ministerial Conference. This is the highest decision-making body. This means that the most important decisions taken within the World Trade Organization will be made by the Ministerial Conference. And this Ministerial Conference is held every two years. This means that this Ministerial Conference is held once every two years, and decisions are made there after sitting together. Second is our General Councils. General Councils come second. All the daily works, all the daily trades happening between countries, dealing with those trades, handling those trades is called the General Council. And they act as a dispute settlement body. This means that if a dispute arises between two countries, a fight occurs, due to which they are not doing business, then it is the job of the General Council to settle that dispute, to adjust that dispute. Third is our Councils and Committees. This means that these Councils and Committees deal with specific areas. There will be a separate Council and Committee for goods. A separate Council and Committee for services. A separate Council and Committee for intellectual property. So, here, there are separate Councils and separate Committees for each area. What is the scope of our World Trade Organization? It handles the trade of goods, or the trade of services, all intellectual property rights, which are called TRIPS. It is the job of the World Trade Organization to handle all these things among countries. And if a dispute arises between countries, a fight occurs, then it is our job to settle those disputes so that they can do business with each other again. Reviewing trade policies means checking whether the trade policies being made by any country, any country making its business trade policy, is that trade policy correct or not, and approving it is also the job of our World Trade Organization. So, the essence is that global trade runs very smoothly all over the world. This is taken care of here, and there is fair competition all over the world. It's not like someone gets an advantage. So, this is taken care of here, and developing countries integrate with the world economy. This means that small countries that are currently developing and the large economies of the whole world, it helps those countries to integrate and mingle with them. After the World Trade Organization, the second major institution we have is the World Bank. The World Bank is an international organization that provides financial and technical assistance to developing countries. For example, India is a developing country. So, if India needs money, financial needs, or technical assistance, then the World Bank will help India with that technical assistance, or it is the job of the World Bank to help any other developing country. So, its objectives are: the first objective is to reduce poverty. If there are developing countries that are working hard and progressing, then it is its job to reduce poverty in those countries. To promote economic development. This means that the economy should develop. That is, economic development should happen in developing countries, and to improve infrastructure. The infrastructure there should be good. Improving this is also its job. Functions come. What are its functions? Our World Bank, first of all, its job is to provide loans. This means they provide loans, they give you credit. This means that if any country needs to run development projects, like building roads, schools, hospitals, and needs a loan for that, needs credit, then that developing country can go to the World Bank and take a loan for it. And secondly, they provide technical assistance. This means that if a country needs advice or training, then they provide expert advice and expert training to those countries in the name of technical assistance. The third thing is poverty reduction. This means reducing poverty. This means they run many programs so that the living standards of the people in those developing countries, how those people are living their lives, those things improve. This is the main reason. The fourth is infrastructure development. This means that all these funded projects, big ones, whether it's an energy project, transportation, or water, being built in any developing country, then funding it, providing money for it, so that the country has good facilities for energy, transportation, and water, providing money for that is also the job of the World Bank. So, its essence is that it helps developing countries to grow, improves the quality of life of people, and the third thing is that the entire country develops in the long term. The entire country grows for a long time, and it helps in this. Next comes our IMF, the International Monetary Fund. The IMF is an organization that maintains stability in the international monetary system. This means that the monetary system all over the world, the entire system related to money that has been built worldwide, maintaining stability in that is the job of the IMF. So, the IMF is such an organization. Its objectives are to increase and promote global monetary cooperation. Okay? So that monetary cooperation increases worldwide and exchange rates remain stable. This means that the value of $1 and Rupees, for example, if $1 is 94 Rupees, then it should remain 94, not fall or rise too much, and work in a stable way. And next comes facilitating international trade. This means making trade easier, which is done between one country and another country, international trade. This is the job of the International Monetary Fund. So, what are its functions? The first function is to provide financial assistance. This means it gives loans to those countries that are facing balance of payment problems. We understood balance of payment in the last unit. Those who haven't watched the video can watch Unit Number Three. We understood surplus and deficit in it. So, it is the job of the IMF to help those countries that are facing a deficit. And to keep exchange rates stable. This means maintaining the currency system, the values of dollars in Rupees, or the value in any country. The third is economic surveillance. This means observing the economic policies of countries. What are the economic policies here, and are these economic policies correct or not? And next is providing technical assistance. This means providing training or any advice related to any policy, if advice is needed, then giving that advice is their job. So, its essence is that it helps countries during financial crises. If a country is facing a financial crisis, going through a bad time, then it helps in that bad time. It helps in maintaining global financial stability and helps in promoting economic growth. So, what is the difference between the three? The main focus of our World Trade Organization is on trade, on the business happening between countries. The World Bank's focus is on the development of developing countries, hence providing money. And the IMF's focus is on keeping the monetary system, the money system of the whole world, stable. So, its main role is to regulate all the trades happening, keep an eye on them. And the World Bank's job is to provide loans for development. If a country wants to develop and needs money, it can go to the World Bank and get it. And the IMF's job is if any country needs financial support, money, during a bad time, then it can go to the IMF. So, the objective of the World Trade Organization is that free and fair trade should happen all over the world. The World Bank's aim is to reduce poverty all over the world. And the IMF's aim is that our global economy, the entire global economy, should remain stable, not change constantly, the value of the dollar should be maintained, not fall or rise too much. So, that is all for today, guys. If you liked the video, like the video, subscribe to the channel, and stay with AdInqution. 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