Answer all questions.

1. Why Do Nations Pursue Economic Integration?
•Expand market size
•Enhance productivity and economies of scale
•Attract investment from outside the bloc
•Acquire stronger defensive and political posture
2. Country-level and firm-level Drawbacks of Regional
Integration
country：
Trade creation – As barriers fall, trade is generated
inside the bloc.
Trade diversion –member countries discontinue some
trade with nonmember countries.
Aggregate effect – reduce global free trade.
Loss of national identity.
Sacrifice of autonomy.
firm：
Transfer of power to advantaged firms.
Failure of small or weak firms.
Corporate restructuring and job loss.
3. What Factors Help Regional Integration Succeed?
Economic similarity.
Political similarity.
Similarity of culture and language.
Geographic proximity.
4. Implications of REI for the Firm.
Internationalization by firms inside the economic
bloc.
Rationalization of operations.
Mergers and acquisitions – the tendency of one firm
to buy another, or of two or more firms to merge
and form a larger firm.
Regional products and marketing strategy.
Internationalization by firms from outside the bloc.