Questions for Discussion
1. Chapter 8’s focus on ‘regional integration’ continues to ask us to understand and evaluate the role of NAFTA to the Texas and local economies. Using a google search, personal observation, &/or other sources; identify a firm/organization in the Dallas Fort Worth area that seems to be benefiting from the regional integration created with NAFTA — give a very brief explanation of your choice.
H. Ross Perot, Jr. and AllianceTexas have benefited mightily from NAFTA. According to Forbes in 2013 (Helman), Alliance was the top foreign trade zone in the US with imports of greater than $4 Billion per year. Although this FTZ has benefitted from the lowering of tariffs anywhere, NAFTA is quite possibly the most important agreement thanks to Fort Worth’s proximity to Mexico.
2. What is the exchange rate for the euro to dollars on the day you are answering this question; what is the exchange rate for the British pound? With our Chapter’s focus on regional integration and with the example of Great Brittan’s refusal to join the common currency (i.e. the euro); what is your conclusion, “did GB make the right decision or should they drop the pound and join the other economies of Europe with the common currency of the euro?
Today, one euro is equal to US$1.10. The British pound on the other hand is $1.55. The pound has held relatively strong for a while now, while the euro has really dipped over the last year. One thing that would concern me about joining a common currency is that there are many nations (27 in the case of the EU) who’s economies impact that value of the currency, but over which you have no control. On that token, it would seem the United Kingdom made the right choice. But, it does complicate matters when dealing with their EU trading partners. Although the US is the top destination for exports leaving the UK, EU countries (Germany, Netherlands, France, and Belgium-Luxembourg) round out the top five. Additionally, three of the top five import nations are among the EU. One has to wonder if the UK would trade more with EU nations if they used the euro instead of the pound.
3. After reading/listening to our media story for Lesson/chapter 8 and reading Chapter 8, you will know something about NAFTA. Some supporters of NAFTA would tell us that, “it’s time for NAFTA countries/economies to expand the regional themes by creating a common currency (similar to the euro). What’s your opinion on the question of a common currency for all the countries covered by NAFTA? Yes/No, please offer a brief explanation of your opinion.
There is very little motivation for the US to agree to a common currency in North America. The US dollar is still the most commonly used reserve currency in trade transactions throughout the world. Additionally, although the economies of the three NAFTA partners are now more intertwined than ever, it is difficult to imagine the US public wanting the value of their currency tied to performance of another economy.
Helman, C. (2013). There’s A Billion Reasons Why Ross Perot Jr. Loves That ‘Giant Sucking Sound’. Retrieved Jul 24, 2015.
Observatory of Economic Complexity. (n.d.). Learn More About Trade in The United Kingdom. Retrieved Jul 24, 2015.
Wild, J. & Wild, K. (2013). International Business: The Challenges of Globalization. (7th ed.). Upper Saddle River, NJ: Pearson.