Physical effects of Mercosur & The Pacific Alliance - Term Paper Example

In a time of global business recession, many countries have entered into agreements to expand their business geographical coverage and to enhance business operations across their countries. The Pacific Alliance and Mercusor are examples of agreements that have been formed to liberalize the business market within the member nations. These agreements have gone way too far in defining the physical aspects of the global business. The Pacific Alliance is an agreement that was coined in 2012 to enhance the global business strategies of the member countries.

When the Peru, Colombia, Mexico, Costa Rica and Chile entered into this agreement, they had the intention to define an integrated business block that will allow them to overcome the pressures of the economic recession that they experienced during the 2008 and 2009 business recession period when America and European economies experienced a sluggish development (Dade and Meachan, 2013). The liberalization of trade in the business environment allows the member countries to make business operations easier and to enhance the physical aspects of the business.

On the other hand, Mercusor was a political and economic agreement between Argentina, Brazil, Paraguay, Uruguay and Venezuela that intended to create a cohesive common market between member countries (Pena, 2013). Although the two agreements have different business terms, they have played a key role in the development of global business. Both Mercusor and The Pacific Alliance have eliminated boundary barriers within the southern region to enhance business operability in this environment. The implication of this is that they have expanded the geographical business development as every country gain a new market to sell and buy goods.

In essence, the member countries can export and import goods freely without any physical limitation. Consequently, the countries can be able to optimize their operation by increasing their export and import bulks and hence being able to increase their sales and reduce the cost of purchase. In addition, the treaties have considerably reduced the tax rates for the movement of goods to ensure that the countries can operate more freely in the new markets (Pena, 2013). This kind of business trend has had a great impact on the business operations in these economic blocks.

The two agreements have also reduced the cost of transportation of goods and services across the borders of participating members. Peru, Colombia, Costa Rica, Chile and Mexico have strived to develop an effective transport and communication network to enhance the mechanics of the movement of goods in these geographically neighboring countries (Dade and Meachan, 2013). One fundamental element of the physical aspect of global business is the formation of the road networks. Countries that have efficient road networks connecting them considerably reduce the transportation cost and hence allow goods and services to reach their market at a cheaper price.

Consequently, it is feasible for the countries offer better market prices giving them a competitive advantage in the market. In turn, it becomes possible to increase the gross sales and the productivity of business within this synchronized region. In addition, the two treaties have had a great impact on the human movement across the boundaries of member countries. The Pacific Alliance eliminated the Visa requirement that previously was a prerequisite condition for the movement of persons from one region to the other (Dade and Meachan,