International Financial Management - Essay Example

Download file to see previous pages To the common man trade is simply the exchange of goods and services between two individuals, groups, and organizations. When trade begins to happen across regional boundaries it is categorized as international trade. Modern day phenomenon such as advancement in technology and globalization have allowed for international trade to happen at a much faster rate over a much larger scale. For this trade to occur smoothly and in order to avoid confusion and chaos; regulation and systematic order are extremely important. For this reason regions join hands to make trade blocs and trade regions which not only allow for a more efficient process but help both the trader and the buyer.
In this essay we will be discussing the role of two trading giants, Organization of the Petroleum Exporting Countries (OPEC), and North American Free Trade Agreement (NAFTA); both of whose introduction caused dramatic changes to the way modern age trade is conducted. Before moving forth it is essential to differentiate between a trade region and a trade bloc. A trade region is essentially an agreement based on regional boundaries. Member countries join such a region based on their geographical location and hence enjoy many trade privileges. An example of a trade region is NAFTA where North American countries come together to form member states. A trade bloc maybe a trade region but it is not necessary since members are made not on geographical proximity but based on ownership of common assets. An example of a trade bloc is OPEC where countries exporting petroleum have come together to ease trade.
OPEC was established when five countries (Islamic Republic of Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela) signed a trade agreement in Baghdad in September 1960. These five countries were then known as the founding members for this organization and were in later years joined by many more countries. Gabon and ...Download file to see next pagesRead More