A-world-of-regions-copy.docx

A WORLD OF REGIONS GROUP 2 REGIN AMIEL TABAMO CHRISTINA ESCOTO CINDIE PARAS DONNABEL ESGUERRA SOPHIA NICOLE GANIA LYNNIE LYNN SAURA ROSE ANN PINGOL CIANAYA JANE FLORES

MARKETS AND GLOBALIZATION: THE LATIN AMERICAN EXPERIENCE Why does Financial Development matter? The empirical evidence clearly shows that more developed countries have deeper and more efficient financial system, including several markets. Financial development can boost growth through several channels: a. Financial Intermediaries b. Risk Amelioration through diversification c. Improving Corporate Governance Evolution and Globalization of Capital Markets a. Main Developments in International Capital Markets b. Developing countries and Globalization Process Main Developments in the Domestic Capital Markets While capital markets in many developed countries have witnesses a boom in the last decades, the picture is more mixed when focusing on developing countries, with wide heterogeneity across nations. Factors behind the Development and Internationalization of Capital Markets a. It is useful to analyze cross-country, time series evidence to macroeconomic and institutional factors.

understand

b. We study how capital markets have responded to the wide array of undertook during the past two decades.

the

role

of

reforms that governments

c. We analyze the fundamentals that drive stock markets’ internationalization process. d. We analyze whether Latin American counties have responded differently than countries in other regions to economic fundamentals and reforms

ASIAN REGIONALISM

REGIONALISM It is the process of dividing an area into smaller segments called regions. e.g. Division of nation into states or provinces Business also uses regionalization as management tool.

GLOBALIZATION It is the process of international integration arising from the interchange of world views, products, ideas and other aspects such as technology

DIFFERENCE BETWEEN REGIONALISM AND GLOBALIZATION NATURE GLOBALIZATION

REGIONALIZATION

NATURE •

PROMOTES THE INTEGRATION OF ECONOMIES ACROSS STATE BORDERS ALL AROUND THE WORLD.

MARKET •

ALLOWS MANY COUNTRIES TO TRADE INTERNATIONAL LEVEL SO IT ALLOWS FREE MARKET.

CULTURAL RELATIONS •

AND

•

PRECISELY THE OPPOSITE BECAUSE IT IS DIVIDING AN AREA INTO SMALLER SEGMENTS.

•

IN REGIONALIZED SYSTEM, MONOPOLIES ARE MORE LIKELY TO DEVELOP.

SOCIETAL

ACCELERATION TO MULTICULTURALISM BY FREE AND INEXPENSIVE MOVEMENT OF PEOPLE.

. •

DOES NOT SUPPORT THIS.

•

REGIONALIZED SYSTEM DO NOT GET INVOLVED IN THE AFFAIRS OF OTHER AREAS.

•

IN REGIONALIZED SYSTEM, ADVANCED TECHNOLOGY IS RARELY AVAILABLE.

AID •

GLOBALIZED INTERNATIONAL COMMUNITY IS ALSO MORE WILLING TO COME TO THE AID OF A COUNTRY STRICKEN BY A NATURAL DISASTER.

TECHNOLOGICAL ADVANCES •

HAS DRIVEN TECHNOLOGY.

GREAT

ADVANCES

IN

FACTORS LEADING TO A GREATER INTEGRATION OF THE ASIAN REGION  MUTUAL BENEFIT WHEN IT COMES TO TRADE, THESE NATIONS CAN READILY SUPPLY EACH OTHER’S NEEDS.  MUTUAL GOALS  SIMILAR CULTURE THE PEOPLE OF THIS REGION ARE GENERALLY ALIKE IN APPEARANCE, TEMPERAMENT WHICH IS SEEMINGLY PEACEFUL. THEY TEND TO GET ALONG QUITE WELL EVEN ON AN INDIVIDUAL LEVEL.  SIMILAR SECURITY NEEDS ASIDE FROM SMALL LOCALIZED REBELS, THIS ASSOCIATION NEEDS ONLY TO CONTEND WITH FOREIGN-SUPPORTED TERRORIST GROUPS WHICH ARE USUALLY HANDLED WELL. THE ASIAN REGION EXTENDS BEYOND THE TERRITORIES OF THE ASEAN MEMBER NATIONS. THE NORTHERN ASIAN COUNTRIES LIKE JAPAN, TAIWAN, NORTH KOREA, AND SOUTH KOREA DO NOT GET ALONG AND APPEARS TO DISTRUST EACH OTHER. OF COURSE THE INVISIBLE WALLS BETWEEN

THESE NATIONS WILL FALL SOMEDAY AND HOPEFULLY, THEY WILL REALIZE THE BENEFIT OF INTEGRATION WITH REGIONAL AUTONOMY.

SOUTH ASIA AND REGIONAL INTEGRATION South Asia is one of the most dynamic regions in the world, with a population of 1.67 billion people and economic growth of 7.1 percent over the last decade. But despite recent shifts, historical political tensions, trust deficit, cross-border conflicts and security concerns contribute to a low-level equilibrium. At present, South Asia is one of the least integrated regions. Intra-regional trade accounts for only 5 percent of South Asia’s total trade, compared to 25 percent in ASEAN. Intra-regional investment is smaller than 1 percent of overall investment. Due to limited transport connectivity, onerous logistics and regulatory impediments and lack of trust, it costs more to trade within South Asia and world’s other regions. Greater cooperation and regional economic integration can bring about gains in these areas and help tap into the proximity and demographic dividend, South Asian countries enjoy. But there are several factors restraining Regional Integration.

Factors restraining regional integration •

High trade costs and investment restrictions

•

Insufficient policy-relevant analytical work on gains of Regional Integration in both trade and investment, to make informed policy decisions

•

Skeptical mindset from previous failures in regional cooperation, misinformation and lack of vocal champions for regional cooperation

•

Relative asymmetry in size among the South Asian countries

•

Historical political tensions, mistrust, cross-border conflicts and security concerns

•

Limited transport connectivity, logistics and regulatory impediments

HOW DO DIFFERENT ASIAN STATES CONFRONT THE CHALLENGES OF GLOBALIZATION AND REGIONALIZATION WHAT ARE THE CHANGES THAT IS GLOBALIZATION AND REGIONALIZATION IS BRINGING ABOUT IN ASIA?  On-going transformation in the composition of production and trade Example: The shift of labour intensive manufacturing out of Hong Kong into mainland China  Continued growth in net private capital inflows to the region

Example: In Hong Kong, Malaysia, and Singapore stock market capitalization as share of GDP exceeds that of France, Germany, and Italy

However, a number of countries in the region face some important policy challenges because of:  First, as these countries develop, their comparative advantages will continue to change.  Second, as the trade and financial links within Asia intensify, development in one economy will have larger impact to others.

AREAS TO PUT INTO CONSIDERATION IN DEALING WITH THE CHALLENGES Trade Much of Asia’s dynamism can be traced to the openness of its economies, and to the competitiveness and transfer of technology that this openness has encouraged. Countries that have yet to open their economies significantly should do so, so that they too can reap these benefits. By the same token, countries that have already benefited from trade liberalization must ensure that the openness that has served them so well in the past is extended to the new trade frontiers, notably services. At the same time, it will be important to increase transparency and the free flow of information on which the service and financial sectors—and, indeed, the modern economy—depend. And as production shifts to higher valueadded products, countries will need to develop effective "exit" policies for non-competitive industries. Financial Area At the domestic policy level, there is no substitute for stable macroeconomic policies—policies that give confidence to financial markets and attract private savings. Likewise, transparent and predictable regulatory policies, and a reliable legal framework are essential ingredients in creating a favourable investment climate. Regional Policy Coordination- With countries becoming more closely integrated, each country has an increasing stake in the sound policies of the others. Accordingly, countries of the region can play a constructive role in encouraging each other to maintain sound policies. The swap arrangements among a number of Asian central banks are a good example of constructive cooperation to maintain regional stability. Certainly, it would be worthwhile exploring how such initiatives can be further developed. Moreover, the effectiveness of bank supervision will be enhanced by greater cooperation between national supervisors in the region, as part of the development of a more global approach to such issues. OTHER CHALLENGES

Increasing trade and financial sector integration-Developing countries of Asia still heavily rely on London and New York Environmental Damage- Asia has become the world’s largest source of greenhouse gas emissions

Income Inequality- Unequal access to opportunity