Describe the variations in trade blocs and evaluate the extent to which they promote globalisation.

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Describe the variations in trade blocs and evaluate the extent to which they promote globalisation.

        Throughout the world, countries have formed many regional trade blocs over the years, and they play an important role in the world trade and economy. But since they started, their effects on globalisation have been much questioned, as globalisation is the other important current in the world economy development.

        Globalisation is the increased interconnectedness across the globe, in all political, economic, social and cultural divisions. It describes continuous process by which regional economies, societies and cultures have been integrated through a worldwide network of communication and trade. This process has greatly speeded up in the last two decades as technological progress make it easier for people to travel, communicate and do business internationally. But the term especially refers to economic globalisation. This is precisely the integration of national economies into the international through trade, capital flows, FDI (Foreign Direct Investment), migration… So in this economic context, globalisation refers to the removal of barriers between national borders so as to facilitate the flow of goods, services, capital and labour.

        Globalisation affects the world in various ways. Economically, it realises a global common market which is based on the freedom of exchange of goods and capital. Financially, it emerges worldwide financial markets, and industrially it emerges worldwide production markets. It also allows a wider access to foreign products for consumers and companies.

        A trade bloc is an agreement between states, regions or countries, also called intergovernmental agreement, aiming to reduce barriers to trade (tariffs and non-tariffs barriers) between the participating states. Trade blocs emerged as a result of the desire to pursue in developing countries import-export development at a regional level, to isolate a region from the world economy and stabilise the economy within that region.

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The most well know trade bloc is NAFTA, between the United States, Canada and Mexico. In the North Atlantic Free Trade Association there is free trade, but not the same degree of harmonisation as the European Union, because trade blocs are also groups of nations who form a custom or economic union. And the EU aims not only at a custom union, but also at an economic union; this means a harmonisation of taxes or monetary policy, and moving towards a single currency.

        Trade blocs exist in various types. Indeed, different levels of trade blocs can be distinguished, because some ...

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