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COMESA is the Common Market for Eastern and Southern Africa. COMESA is the largest regional economic organization in Africa, with 19 member states and a population of about 390 million. It was formed to replace the former Preferential Trade Area (PTA).

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Trading blocs are resulting in increased protectionism - Explain?

It has been suggested by many commentators that trading blocs are a sound and efficient way to create sustainable economic growth. Explain negatives and positives effects on countries when becoming part of trading blocs. After the last decade the move to form regional trading blocs has increased dramatically as 194 trade agreements have been notified to the general agreement on trade and tariffs and the world trade organization. Trading blocs are when groups of countries have established special preferential arrangements, governing trade between other members. Trading blocs are created to encourage trading partners to buy and sell goods already made in their home countries The reason by the formation of trading blocs can be characterized as a move from 'close regionalism' to a more open model. The most common reason for the formation of trading blocs today is not for taking advantage of the economic benefits of being a member of a trading bloc, but of increasing the international political and economic leverage of those nations that are members of the trading bloc. In particular, the European Union was formed with both of these goals in mind. The definition of trading blocs varies wid ely, however according to this definition a trading bloc is defined by four characteristics. These long-term gains can include - increased competition, economies of scale, stimulus to investment and a more efficient use of economic resources. the recent wave of trade regionalization has spread to almost all continents in the world The formation of free trade zones and trade blocs is one of the major issues facing the world trading system - whether it will lead to increased protectionism, or whether the trade blocs will promote trade liberalization. Belgium and Luxembourg formed an economic union in the 1920's. Every significant economy in the world, except China, has signed on to the World Trade Organization. Competition and scale affects refer to the advantage of increased direct investment from the formation of economies of scale. the increase of efficiency and determination to develop could lead to increased competition leading to a greater oligopolistic collusion because of the integration, for example the EU is in a free trade agreement and therefore have a equal part in the bloc however if all parties become competitive all members will be participating in a oligopoly which could prove an advantage as they all have reached there goals however could leas the market resulting in tension between bloc members. The European union also share a foreign investment with there inflows increasing from 28% to 33% during 11 years. Asia Pacific Economic Corporation (APEC) and COMESA are other examples of free trade areas. Free trade is certainly more efficient than discriminatory trade, and has provided overall has provided many economic benefits unlike most of the proclaimed regional trading arrangements of thirty years ago, the current round of free trade arrangements (FTAs) is having a significant effect on trade. Another disadvantage is that they are not good methods for liberalizing trade with outsiders, which appears essential to outside members. This leads to the erosion of monopoly positions and consequently promotes efficiency gains within firms. it is vital that when setting up trading blocs it is essential that they are done so with the right framework of policies e. Trading blocs can also encourage economies of scale to those markets who do not obtain enough inputs to achieve such goals.


South-south cooperation in the contemporary economic order?

South-South cooperation seeks to strengthen economic relations among the newly industrialized and developing economies of Africa, Asia, Latin America, and Oceania. The objective is to reinforce and expand the mutual benefits that can be derived from deepening, more expansive interdependence among the countries of "the South." Prompting the quest for greater cooperation has been the belief that the historically fashioned global, trade, investment, production, and financial regimes remain fundamentally biased in favor of the economic and strategic interests of the core capitalist states of North America, Western Europe, and East Asia. More immediately, South-South cooperation is propelled by slow overall growth in South-North trade, the expansion of the European Union, and the consolidation of the North American Free Trade Agreement (NAFTA) which, along with a general increase in protectionist measures, promise even greater obstacles to manufactured and agricultural exports from the South, growing attacks within the framework of the World Trade Organization on trade preferences for the South, and the conviction that the concerns of smaller, weaker economies are being largely ignored in this era of global economic liberalization. South-South cooperation is seen as a way to stimulate economic growth, increase the commonly low levels of trade among Southern economies, reduce the dependency on Northern markets and capital, and, in general, place the countries of the South in the position to take greater control of their economic fortunes. Actual and potential benefits of such cooperation include coordinated and strengthened bargaining with potential investors, with suppliers, and within international economic policy-making bodies. Another key benefit is the overcoming of the political barriers to greater economic integration and rationalization, thereby enlarging the economic space for nascent and expanding South-based industries. The means for realizing South-South cooperation include preferential trade agreements, freer movement of goods, services, and people, direct investment, development assistance, joint research and development, the transfer of appropriate technology, food security and agricultural development agreements, regional transportation and communications networks, and joint negotiating positions. The origins of South-South cooperation lie in the coming together of the newly independent African and Asian countries and the developing countries of Latin America in the 1950s and early 1960s to argue for basic reforms in the organization of world trade and finance and to fashion a political stance independent of the Cold War polarization. Notable among the early regional and interregional conferences that laid the intellectual and political foundations for South-South cooperation were the Afro-Asian Conference (Bandung, Indonesia, 1955), the First Summit of Non-Aligned Countries (Belgrade, 1961), and the Conference on Problems of Developing Countries (Cairo, 1962). New international institutions emerged. For example, between 1955and1964 the Nonaligned Movement, the Organization of Petroleum Exporting Countries, the Group of 77, and the United Nations Conference on Trade and Development were established as organs for defining and promoting political cooperation and economic development strategies for the countries of the South. The landmark Declaration and Programme of Action on the Establishment of a New International Economic Order, adopted at the UN Sixth Special Session in 1974, provided the impetus for strengthened commitment to South-South cooperation as an integral part of the effort to fundamentally restructure global economic relations. Inspired by the history and success of the European Union, economic integration among neighboring states is the most prominent feature of South-South cooperation. Subregional and regional free trade and preferential trade associations, common markets, and lake and river basin development associations continue to proliferate. New cooperative arrangements are being developed and once dormant associations are being revitalized. Among current South-South regional economic associations are the Economic Community of West African States (ECOWAS), the Southern African Development Community (SADC), the Common Market for Eastern and Southern Africa (COMESA), the Maghreb Arab Union (MAU), the Association of Southeast Asian Nations (ASEAN), the South Asian Association for Regional Cooperation (SAARC), the South Asian Preferential Trading Agreement (SAPTA), the Gulf Cooperation Council (GCC), the Latin American Integration Association (LAIA), the Andean Common Market, the Southern Cone Common Market (MERCUSOR), the Central American Common Market (CACM), and the Caribbean Community (CARICOM). Commitments to technical and economic cooperation among the countries of the South remain strong. For example, the United Nations Development Programme, and the South Centre, an intergovernmental organization established in 1994, are strong advocates of South-South cooperation as a core mechanism for defending the economic interests and promoting development in the current period of global economic liberalization. It is clear, however, that despite voiced commitments and formal agreements, the gains of cooperation remain elusive. Notwithstanding the growth in economic and technical relations among the countries of the South, such cooperation has not had a marked impact on the overall character of the international economic order. The South remains overwhelmingly dependent on the industrialized economies of the North for export markets, foreign investment, concessionary finance, and technology. Increasing economic differentiation and rivalry among the countries of the South, lukewarm popular support for regional integration schemes, often-intense political conflicts, and renewed efforts by competing Northern economies to integrate regions of the developing world into their economic spheres undermine the pursuit of substantive South-South cooperation. There is also a clear sentiment among the states of the South that dependent integration with the North is to be preferred to the danger of increased marginalization in the evolving, dynamic, global economic order. Nevertheless, South-South cooperation remains a salient issue in the pursuit of sustainable development, and could emerge as a more prominent feature in the competitive struggles over the structure of the global political economy in the twenty-first century.