4.02 Exemplify the 4 types of economic systems, & the

effects of economic integration on international

marketing

http://youtu.be/sO75ZsvMkc8 YouTube clip on history of EU

The political economy - refers to idea international business is

influenced by economic & political/legal environments of countries Republic - country with democratic process

which elects representatives to govern country

Ex) the US, France, South Africa, Haitihttps://www.cia.gov/library/publications/the-world-factbook/fields/2128.html#gm

for listing of government types

Economic systems Governs how country controls production,

distribution, & consumption of goods & services.

US-EU conflict activity

http://www.ustr.gov/countries-regions/europe-middle-east/europe/european-union

Review the link and list the points of contention in trade between the US and EU. Also how does each bloc benefit each other – Create in a PPT format and present to the class

Economic systems (con’t) Market economy - free market answers 3

economic questions Private property & entrepreneurship

are characteristics. Have little government involvement. Do not exist in pure form, considered

theoretical.

Economic systems (con’t) Mixed economy - system combines

market economy characteristics with varying levels of government control.

Most developed countries are mixed Ex) US, Canada, Germany, Japan, etc.

Government control mostly to protect consumers & businesses.

Socialism - strong form of mixed economy Sets strong rules & regulations to control

businesses practices. Aims to protect all citizens.

Economic systems (con’t) Planned or Command economy -

government acts a central planner and answers three economic questions. Former Soviet planned economies in Central

and Eastern Europe collapsed. China has moved some products towards

market-based; many large industries controlled by state.

Ex) North Korea, Cuba, Vietnam, and Laos

Economic systems (con’t) Traditional economy - customs, religious

beliefs, & historical patterns determine answers to 3 economic questions. Ex) Amish, Aborigines, & Amazon tribes

http://youtu.be/csYN5qBXZBU YouTube clip on types of economic systems

International marketers need different sales strategies based on economic system Many companies cautious about selling in

Chinese market due to weak government controls over patents & competitive practices. Chinese companies known to steal product

designs & packaging. Minimal regulations on workers safety or

environment. Allows for lower production costs.

General trend Last 15 years has been toward market-

based or mixed market economic systems.

Economic systems benefit from international marketers serving as key tool in meeting needs of country.

Economic integration Refers to development of trading

partnerships with elimination of trade restrictions.

Free Trade Area (FTA)- all barriers removed

Customs union - FTA with common trade policy to non-members.

Ex) European Union & Turkey since 1996

Economic integration (con’t)

FTA (con’t) – Common market - customs union that

allows labor, capital & technology to move between members

European Union, an economic union, coordinates economic policies between 27 member countries

http://www.youtube.com/watch?v=VvIPSY_Sbfg

US-EU conflict activity** http://www.ustr.gov/countries-regions/europe-middle-

east/europe/european-union

Review the link and list the points of contention in trade between the US and EU. Also how does each bloc benefit each other – Create in a PPT format and present to the class

Regional trade agreements ASEAN - Association of Southeast Asian

Nations COMESA - Common market for East &

Southern Africa CACM - Central American Common

Market CARICOM - Caribbean Community &

Common Market

Regional trade agreements (con’t) The more integrated the region, fewer

variances needed in product development.

A standardized set of rules & regulations brings down cost of product development & sales.

BONUS ACTIVITY!! Find 3 interesting facts…dig deep!!! http://www.stoptheftaa.org/ http://www.globalexchange.org/campaigns/ftaa

The Americas NAFTA - North American Free Trade Agreement

with Canada, Mexico & US. Went into effect in 1994. Eliminated duties on ½ of all US goods shipped to

Mexico. Set agreements to phase out all other tariffs in

2008. Protects patents, copyrights, & trademarks. Eases investments between three countries Set rules related to worker and environmental

protections. Is controversial; is viewed as cause of job losses in

US.

The Americas (con’t) CAFTA - Central America Free Trade

Agreement with Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Dominican Republic & the US. Went into effect in 2005. 80 % of U.S. consumer & industrial goods

exports no longer subject to tariffs. Tariffs on rest of products phased out over

ten years by 2015.

The Americas (con’t) FTAA - Free Trade Area of Americas will

include all countries in Americas except Cuba Was to be enacted in 2005, but lacked support

of proposed member governments & citizens http://www.youtube.com/watch?

v=VmHiICjcp6g&playnext=1&list=PL0CFBDB0CCA8C4AC8 YouTube clip on FTAA