Complete 4 page APA formatted essay: Regional Paper.Download file to see previous pages... This trend of regional integration, irrefutably, posts opportunities for business organizations and gives bir

Complete 4 page APA formatted essay: Regional Paper.

This trend of regional integration, irrefutably, posts opportunities for business organizations and gives birth to multinational companies. The formation of free trade zones and regional blocs irrefutable lowers the cost of business operation because generally, it encourages countries to attract the inflow of foreign direct investments through tax holidays and other financial incentives. It should be noted that this practice is very common especially in developing countries where foreign direct investment is viewed as a way to curb unemployment, increase local competition, enhance the efficiency of the domestic industry players and stimulate the whole economy. Regional integration also opens doors for other business activities through joint venture, licensing, franchising, and others.

Regional integration also posts opportunities of costs savings to business organizations. Through trade blocs, companies are also able to take advantage of lower input costs of certain materials which can be readily imported from other countries since tariffs and quotas are eliminated. It should also be noted that globalization also made possible the transfer of service from one country to another. Coupled with the rapid development and wide popularity of the internet and other advance technologies, business organizations are able to lower their costs of operation by outsourcing various back-office services from countries which have relatively lower wage requirements but with a pool of skilled workforce. Through business process outsourcing, companies enhance their profitability by incurring lower operational expenses while enabling them to focus on their major activities and core competencies.

The North American Free Trade Agreement is a regional bloc with members including Canada, Mexico, and United States (North American Free Trade Agreement 2006). It is apparent that the countries comprising this regional bloc present different stages of economic development. During the time of integration, the United States is already recognized as one of the economic superpowers in the world with its high level of GDP and wages. The United State's largest sector in the economy is the services which employs almost 75% of the entire population (US Department of State 2007). Similarly, Canada is one of the world's wealthiest nations with its high per capita income. This country has been growing rapidly in the past years with low unemployment rate and large government surpluses on the federal level. The country has remarkably maintained the best economic performance in the G8 since the recession in 2001. It should be noted that Canada is the second largest nation in the world next to the United States (US Department of State 2007). Mexico, in comparison, lags behind its trade partners in terms of economic performance. Even though it recently manages to improve its income, Mexico still suffers from the large disparity of income between the upper and lower social classes. Compared to its trading partners, the country has a far lower wage rate (US Department of State 2007).

With its establishment in the 1994, this agreement has brought numerous developments in each of the countries' business sector.