Unit 2 International economic cooperation and regional integration

Aims and objectives of Unit 2:

•• to learn the issues related to international economic cooperation and regional integration;

•• to develop the skills of reading and comprehending texts about various aspects and types of integration in the area of economy;

•• to train the students to infer the meaning of unfamiliar words through contextual clues;

•• to enrich the students’ professional vocabulary related to the topicsofUnit2andstrengthentheirabilitytouseitinprofessional discourse;

•• to develop the learners’ skills and habits of translating and rendering texts by summing up information;

•• to improve the students’speaking and writing competences within the framework of Unit 2.

Task 1. Read and translate Text 1 into Russian.

Text 1

Modern trends in international economic integration development

Developing world economic relations on the basis of the international division of labor is becoming increasingly significant for many national economies. The convergence and intensification of the interdependencies of states and their economic entities is the main trend of the world economy.

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The processes taking place in the economies of individual states and their integration groupings cannot be considered without taking into account external factors conditioned by the globalization of the world economy.

Increasing economic interdependencies between the economic units are clearly being manifested through the pace and duration of the world economic crises. Manifestations and consequences of the global financial and economic crises differ and mainly depend on the country and its role in the world economic system. The stability reserve of the national economy in the controversial circumstances of globalization is conditioned by the weighted combination of the governmental policy of protectionism and gaining an advantage on the international division of economic factors.

Asystem approach is needed for the purposeful quality change of the position of the individual state in the changing architecture of the global economy.

Characteristic features of internationalization are increasing international interconnections and interdependencies of different countries, regions and business entities at various levels.An indicator of the internationalization of economic life is the share of foreign trade of a country in its gross domestic product.

International economic integration is limited to certain regions of the world, which determines the wide use of the term “regional integration.” Regional economic integration is an economic and political union of the countries due to the development of deep and stable relationships and the international division of labor. Regional economic integration can improve the competitiveness of individual countries and across groups due to the formation of regional intergovernmental economic clusters. 40% of the world trade is directly affected by regional integration agreements only because Europe and North America have liberalized their regional trade. This shows the importance of regional economic integration.

International economic integration is considered to be a defense against the negative impact of globalization. There are two main areas

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in contemporary integration trends: (1) geographically close countries with a similar level of economic development form unions due to the intensivetradeandeconomicrelationsbetweenthem,(2)regionalunions are created by geographical and historical features of the integrating parties, their interests and the levels of economic development.

International economic integration development trends vary significantly, which can be explained by the multipolarity of the world economy. These trends are caused by attempts to resist globalization challenges and achieve collective goals through closer regional cooperation.

(From:https://www.researchgate.net/ publication/272155293_Modern_trends_ in_international_economic_integration_development)

Task 2. Make up a list of new words from Text 1. Try to deduce their meanings from the context.

Task 3. Mark the statements as TRUE/FALSE. Explain your answers.

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Task 4. Read Text 2 and speak on regional economic integration and its four main types.

Text 2

What is regional economic integration?

Regional economic integration is expanding geographically and intensifying worldwide – in Europe, Asia, Africa, the Middle East, NorthAmerica, the Pacific, and SouthAmerica.

Regional economic integration has enabled countries to focus on issues that are relevant to their stage of development as well as encourage trade between neighbors.

There are four main types of regional economic integration.

1.Free trade area. This is the most basic form of economic cooperation. Member countries remove all barriers to trade between themselves but are free to independently determine trade policies with nonmember nations. An example is the North American Free Trade Agreement (NAFTA).

2.Customs union. This type provides for economic cooperation

as in a free-trade zone. Barriers to trade are removed between member

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countries. The primary difference from the free trade area is that members agree to treat trade with nonmember countries in a similar manner. The Gulf Cooperation Council (GCC) is an example.

3.Common market. This type allows for the creation of economically integrated markets between member countries. Trade barriers are removed, as are any restrictions on the movement of labor and capital between member countries. Like customs unions, there is a common trade policy for trade with nonmember nations. The primary advantage to workers is that they no longer need a visa or work permit to work in another member country of a common market. An example is the Common Market for Eastern and Southern Africa (COMESA).

4.Economic union. This type is created when countries enter

into an economic agreement to remove barriers to trade and adopt common economic policies.An example is the European Union (EU).

(From: https://2012books.lardbucket.org/books/ challenges-and-opportunities-in-international-business/ s09-02-regional-economic-integration.html)

Task 5. Browse the internet to fill in the table with missing informationaboutthemostsignificantregionalinternational agreements.

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Task 6. Study the definitions of international cooperation and expand on them with illustrative examples.

1.The process of working with another company, organization, or country in order to achieve economic benefit.

2.A universal mode of interaction between two or more countries based on sharing research results, production, commerce, protection of investments, and industrial know-how.

3.Internationalnetworkingandwidermarketsforthenewinnovative products or services.

Task 7. Read Text 3 about international armaments collaboration and make its written/oral summary. Follow the outline:

−− The title of the text;

−− Its main idea/subject-matter;

−− The most important facts, names and figures; −− The addressee (whom the text may concern).

Text 3

International cooperation, mergers, and acquisitions

International cooperation has always been common in the arms industry. Companies can use international armaments collaboration, joint ventures, and strategic alliances to achieve benefits of size without losing independence. All of these techniques have been adopted by arms-producing companies during the post-Cold War period, in particular in Europe, where cross-border acquisitions have been difficult to achieve. Joint ventures are partnerships, often in the form of a jointly owned company, where two or more companies share profit, loss, and control. They are an option for companies that want to combine without having to merge. During the post-Cold War period, formation of joint ventures increased significantly in Europe. Major intra-European examples of cross-border joint ventures

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include Eurocopter, formed in 1992 to merge French and German helicopter activities; Astrium, formed in 2000 to combine the space activities of France, Germany, and the UK, now wholly owned by European Aeronautics, Defence and Space Company (EADS); and MBDA, formed in 2001 to combine the missile activities of France, Germany, Italy, and the UK. These large joint venture companies, owned by the parent companies of the combined activities, are today among the major arms-producing companies not only in Europe but also internationally. The main transatlantic example is French–US Thales-Raytheon Systems, formed in 2001, and described as the first transatlantic alliance between two global arms-producing companies.

Cross-border mergers and acquisitions are the most radical forms of international integration and were rare during the Cold War when the production of armaments was a sector characterized by strict national protection. During the post-Cold War period this has begun to change, in particular within Europe. Two major examples of intraEuropean mergers are the creation of French–German-Spanish EADS in 2000 and the acquisition of Racal Electronics in the UK in the same year by the leading French defense electronics company Thales. There have also been a number of US acquisitions in Europe, the most important of which are Bofors Weapon Systems (Sweden), FiatAvio (Italy), QinetiQ (UK), and Steyr Fahrgezeug (Austria). Efforts by European companies to acquire US companies and establish subsidiaries in the USAhave not been very successful due to the strict US rules facing foreign-owned companies. The main exceptions are British companies, which have been given special treatment. As a result, British companies, and in particular BAE Systems have made a number of acquisitions in the US arms industry. However, at the prime contractor level there has been no major transatlantic merger similar to the creation of EADS in Europe. Cross-border acquisitions have been successful in accessing foreign markets. For example, Thales has become the second largest defense contractor in the UK, and BAE Systems now have more sales to the US DOD than to the British Ministry of Defence.

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What is emerging is a web of cross-border ownership and collaboration relationships between companies, primarily within Europe, but also across the Atlantic and with other countries. In the transatlantic dimension, joint ventures and teaming arrangements for bidding on arms procurement contracts still serve as second-best solutions to access each others’markets. At the European level, BAE Systems and EADS form the two poles around which most other European defense and aerospace companies have regrouped since the late 1990s. By 2005 this had resulted in a significant degree of European integration. However, while this represents a significant change in comparison with the Cold War arms industry, it does not represent a pan-European arms industry. Furthermore, European integration has been concentrated to the aerospace and electronics sectors, while there has been only limited integration in other sectors, such as shipbuilding and land armaments.

(From: https://www.sciencedirect.com/topics/ social-sciences/international-cooperation)

Task 8. Read Text 4 to complete the sentences after the text.

Text 4

The deepening of international cooperation is most likely to occur, however, in regional groupings like the European Union. A report for the European Commission chaired by Jacques de Larosière recommended the formation of two new European institutions: the European Systemic Risk Council (ESRC), which would have the function of pooling and analyzing all information relevant to financial stability and ensuring a proper flow of information between the ESRC andmicroprudentialsupervisors.TheESRCwouldalsoberesponsible for putting in place an early warning system. In addition, Larosière proposes the creation of a European System of Financial Supervisors (ESFS), which would be the coordinating body for a supervisory system that would remain primarily decentralized with national

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supervisors continuing to carry out day-to-day supervision. There is also a need for a coordinating body at the EU level that would have three main functions: (1) more intense cooperation in the supervision of major cross border firms; (2) processes for defining supervisory standards and for peer review of specific supervisory approaches; (3) morecoordinatedmacro-prudentialanalysis,developingasharedview of emerging risks which would inform the refinement of regulation as well as specific supervisory responses.

(From: https://www.sciencedirect.com/topics/ social-sciences/european-institution)

1.International cooperation is most likely to deepen in regional … .

2.The European Commission report recommended the formation of two new European … .

3.…wouldhavethefunctionofpoolingandanalyzingallinformation relevant to financial stability.

4.The ESRC would ensure a proper flow of information between the ESRC and microprudential … .

5.The European System of Financial Supervisors (ESFS) would be the coordinating body for a … system.

6.There is also a need for a coordinating body at the … level.

7.The coordinating body would have the functions of supervising major cross … firms, defining supervisory … and … review of specific supervisory approaches as well as developing a shared view of emerging … .

Task 9. Translate Text 5 into English.

Text 5

Международное сотрудничество и интеграция

Понятие «интеграция» вошло в политический словарь в 20-х гг. прошлого века, его начали активно использовать не-

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мецкие ученые X. Кельзен и Д. Шиндлер. В мировой политике международная интеграция означает объединение институтов, структур и даже целых государств в социально-политические или социально-экономические общности. Понятие «интеграция» используется в разных сферах – от политики и экономики до космоса и экологии.

Большинство современных исследователей отличают интеграциюотсотрудничества.Интеграцияинтерпретируетсякакпроцесс образованияцелостности(единства)изэлементовиличастей,образование какого-то нового качества, не тождественного простой суммеэлементов.Сотрудничествоженепредполагаетобразованияцелостности, а лишь реализацию некоего общего интереса.

Сегодня интеграционные процессы в разных регионах мира набирают высокие темпы. Основные причины интеграции – глобализация и быстрое развитие информационно-коммуникацион- ных технологий, технологический прогресс, нарастание противоречий, нерешенность глобальных проблем.

Современные исследователи выделяют шесть основных моделей интеграции:

1.Модель общего центра (Европейский союз, СНГ).

2.Модель межправительственных договоров (МЕРКОСУР, АСЕАН и АТЭС, ЕврАзЭС, БРИКС, ШОС).

3.Модель доминирующего участника (экономическая интеграция вокруг ЮАР).

4.Модель корпоративного взаимодействия (инвестиции американских ТНК в Мексике).

5.Модель неформальной торговли (страны Западной Африки

иЮжной Азии).

6.Модель негосударственного права (процесс гармонизации стандартов бухгалтерского учета в разных странах мира).

Россия активно участвует в интеграционных процессах в разных регионах мира. Самым большим интеграционным надгосударственным образованием на постсоветском пространстве является Содружество Независимых Государств (СНГ). Cегодня

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Содружество, по-существу, распалось на несколько экономических блоков: Евразийское экономическое сообщество (ЕАЭС), ГУАМ (Грузия, Украина, Азербайджан и Молдова), Союзное государство России и Белоруссии. Основной целью ЕАЭС является создание единого экономического пространства на территории входящих в него стран.

В настоящее время Азиатско-Тихоокеанский регион – зона особых интересов России, включая внутреннее развитие Сибири и Дальнего Востока. За последние годы были созданы механизмы экономического взаимодействия, такие как Шанхайская организация сотрудничества (ШОС), АСЕАН, Азиатско-Тихоокеан- ское экономическое сотрудничество (АТЭС) и др.

Россия также активно участвует в европейских процессах региональной интеграции. В настоящее время действует ряд договоров и соглашений, регламентирующих отношения российскоевропейского регионального сотрудничества.

Одним из приоритетов региональной интеграции для России является группа БРИКС (Бразилия, Россия, Индия, Китай, Юж- но-Африканская Республика), которая, по мнению российских экспертов, в перспективе могла бы стать наиболее влиятельным «не западным» центром многополярного мира, где Россия играет ведущую роль.

(From: https://studme.org/198138/politologiya/ mezhdunarodnoe_sotrudnichestvo_integratsiya)

Task 10. Write an essay (up to 250 words): “International economic integration – its pros and cons.”

Task 11. Make a project “The Organization for Economic Cooperation and Development (OECD) as an international discussion platform for broad economic issues.” Search the internet for relevant information on:

−− The history and founding of the OECD;

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−− OECD objectives;

−− Its functions and responsibilities; −− OECD structure (composition);

−− Russia’s prospects for membership in the OECD.

Recommended internet sites for compiling information:

https://en.wikipedia.org/wiki/OECD https://ru.wikipedia.org/wiki/Организация_экономического_

сотрудничества_и_развития http://old.economy.gov.ru/minec/activity/sections/foreign

EconomicActivity/economic_organization/russiaoecd/oecd/ https://globalcentre.hse.ru/oecd https://byjus.com/free-ias-prep/oecd/ https://stats.oecd.org/

https://data.oecd.org/

www.oecd.org/russia

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