Paper Topic:

International Business

Running head : INTERNATIONAL BUSINESS

International Business

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Abstract

Regional economic blocs significantly impact business environment in member states . MERCOSUR will certainly change the business climate in Venezuela . Business owners will have to develop new business plans to adjust their business activity to the new changing economic and social conditions under the impact of MERCOSUR associate membership

International Business

Introduction

When a country enters a regional economic bloc , it is appears under the impact of the economic processes which take place

within this bloc . For Venezuela to enter MERCOSUR means to re-evaluate its economic emphases For separate businesses to enter MERCOSUR means to re-consider their business plans , and to adjust them to the needs of the member and non-member economic partners . This is where we face the major difficulty : entering MERCOSUR immediately divides business partners into the two different groups , with different needs and different economic realities . In to keep business successful owners have to take into account the peculiarities of Venezuela 's entering MERCOSUR

Benefits and drawbacks of MERCOSUR for Venezuela

To start with "the purpose of MERCOSUR is to create a common market in which goods and services can be freely traded among member countries and to permit the unrestricted movement of factors of production , the coordination of macroeconomic and sector policies , and the harmonization of national legislation in to enhance competitiveness (Roett 2004

Venezuela might certainly view MERCOSUR as the gateway to the new markets , which will allow free flow of goods , services , and capital Yet , everything is not so simple . MERCOSUR will hardly provide Venezuela with all expected economic benefits . One cannot neglect the opportunities which Venezuela gains as a result of becoming an associated member of MERCOSUR : these include the expansion of markets better regional cooperation , closer economic contacts with the member countries , improved system of customs duties , etc . Simultaneously MERCOSUR drawbacks for Venezuela evidently overweigh the benefits of becoming a MERCOSUR associate member

First of all , Venezuela has become an associate , and not a full member of MERCOSUR . What does this mean ? This means that Venezuela is not a full member of the common market . Associate members "possess little authority to participate in the decisions and meetings of MERCOSUR 's institutional bodies , and they are not bound by those decisions or even by the broad MERCOSUR policies outlined in the treaty of Asuncion or the Quro Preto Protocol (Stanford , 2005 . Venezuela will not be able to perceive the economic benefits of MERCOSUR to the fullest , because associate members have limited access to free markets . Second , the relations with non-member states are of major concern . MERCOSUR is actually an instrument of preferential trade , and preferential trade will cause the two-fold effect onto Venezuelan economy . On the one hand it will promote free trade between MERCOSUR members on the other hand it will distort the trade balance with the non-member countries (Stanford , 2005 . Under the impact of lower customs tariffs , Venezuela will open the market to cheaper products of...

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