• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Assess the economic effects of the growth of trading blocs on the global economy

Extracts from this document...


"Assess the economic effects of the growth of trading blocs on the global economy" [20] Trading blocs are groups of countries that agree to reduce trade barriers amongst themselves. This is used to promote trade activities within certain areas, whilst also assisting in economically managing specific regions. By implementing trade blocs it provides a means of agreement between the countries within that trade bloc to enable them to benefit from each other through trade. A trading bloc increases and creates trade between countries. Trade creation occurs when consumption shifts from a high cost producer to a low cost producer. For example, if the UK started taxing imported Brazilian sugar, but did not tax imported European Union sugar, consumption would shift to European Union sugar because it is cheaper than Brazilian. ...read more.


Inflation within the trade bloc could also lead to global inflation rates. Due to the protectionism of the trade bloc, it could lead to rising inequality between the bloc countries and the countries which attempt to import. This can be seen with countries in Africa, and South America who attempt to import raw materials and foodstuffs into the EU, but are prevented from doing so because of tariffs imposed on them. They are trying to stimulate their country?s economy through export led growth, but this is stifled if other countries are barring their entry to the global market. Furthermore, within trading blocs with free trade, members knowing that they have access to each other?s markets, members are encouraged to specialize, countries can then benefit from Another economic effect of trading blocs is that it can make companies from outside certain trading blocs struggle. ...read more.


Much of this money is then sent home, which means it leaves the host economy. This is a removal from the circular flow. Trading blocs are also used as protection; an economy will have more economic presence as a group, this also increases political stability and support from trading bloc members. I think that overall, the economic effects of trading blocs on the global economy is negative to the majority of countries around the world that are not within a trading bloc. Although the countries within the trading bloc benefit from free trade within the countries, countries outside the bloc may have comparative advantage. It skews what should be world economic growth, and deprives some countries of being able to develop. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level UK, European & Global Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level UK, European & Global Economics essays

  1. Economic Growth HSC Notes

    Unemployment was as low as 4.3%. Labour shortages and poor workforce participation rates were and are the main barriers to higher economic growth levels. Policies to Sustain Growth: * Monetary policy targets a lower inflation rate, (a low inflation rate means lower interest which would encourage consumption and investment)

  2. Carbon Credit Trading

    Yours sincerely, Independent Scholars from McGill University ______________ _____________ _____________ _____________ ______________ Claire Hackett Dayna Murray Aditya Swarup Simon Turcotte Lefei Xie Key Readings: 1. Merrill, A., & Jain, V. (2005, September). Europe leads way in new era of carbon trading.

  1. Where does the World Trade Organisation fit in the overall scheme of international public ...

    special and differential treatment measures into mandatory provisions ... with clear recommendations for a decision by July 2002".98 This deadline had to be shifted back to end December 2002 due to lack of agreement. It would be a grave mistake if the reviews of SDT resulted in a return to

  2. Why has GDP growth been so slow in Somalia?

    1990; a debt trap ensnaring many African states, where the peripheral country's economic policy is dictated by the hegemonic West. Giles Bolton sums this up when he says "Africa gets what we decide to give it, well intentioned or otherwise, especially when it comes to the aid we provide and the trade rules we want set"14.

  1. Will trading fairly reduce world poverty?

    International trade has been growing for hundreds of years. Between 1970 and 2005 alone, the value of international trade increased more than ten folds and was worth over �11.5 billion every day in 2005. (Source; Fairtrade.org.uk) Many argue that trade is not fair. LEDCs lose out because MEDCs control world trade.

  2. uk trading position report

    At the turn of the century many economists were pointing out how the French, German and American manufacturers were overtaking the UK firms on both price and quality. Britain's textile industry, once one of the countries most important exporters,

  1. The Effects of China's Rapid Growth on the US Economy

    While both American exports to and imports from China have increased in tandem, the latter has largely exceeded the former ensuring that China has enjoyed a persistent bilateral trade surplus with the United States. American purchases of Chinese goods have risen by more than 50 per cent since 2000, reaching 152 billion dollars in 2003.

  2. The Causes of Global Inequality

    Alongside industrialisation came capitalism, which saw an end to the 'old ways' of feudalism. However, as Mittelman and Pasha (1997) point out this departure from tradition was not easy, prior to this pauperisation, food riots and overcrowding in towns and cities were endemic, the path to modernity was not an easy and straightforward one.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work