Economic integration

“ Committee on Competitiveness and Business Facilitation 1. The Parties recognise that, in order to enhance the domestic, regional and global competitiveness of their economies, and to promote economic integration and development within the free trade area, their business environments must be responsive to market developments. ”

“ Dismantling protectionist barriers and providing correct incentives and support shall make our industry more efficient and world competitive — and our exports, the spearhead for economic revival and growth. ”

“ But in practice the system works quite otherwise, for all these countries that develop their resources with our money aim at developing an export trade and selling goods to us, and as they have not yet reached the point of economic altruism at which they are prepared to sell goods for nothing, the increase in their production means an [Pg 61] increasing demand for our commodities and our services. And in the meantime the interest on our capital and credit, and the profits of working the machinery of exchange, are a comfortable addition to our national income. ”

“ And we can only do it if—granted that we can induce the world to accept this principle of international division of labour—we can prove ourselves, by our economic and productive efficiency, to be the best and cheapest producer of those classes of goods in which our skilled labour and fixed capital is invested. ”

“ That exchange of commodities which free-trade promises so greatly to increase, will ultimately have the effect of specializing, in a greater or less degree, the industry of each people. So that beginning with a barbarous tribe, almost if not quite homogeneous in the functions of its members, the progress has been, and still is, towards an economic aggregation of the whole human race ”

“ Capital offered facilities for the planting of new industries, the development of trade, and the opening up of mines and other natural advantages; so that the means lay at hand for promoting material progress of every kind. Hence new questions of economic policy came to the front. The efforts of traders were no longer confined to retaining exclusive commercial rights; but they began to consider how the various resources within a given area might be developed, so that by the interaction of different interests the greatest material prosperity might be attained in the community as a whole. ”

“ The aim of free trade or unrestricted commerce was equality of trade opportunities; but such conditions of unrestricted competition tended to concentrate trade in the hands of the strongest interests and to prevent equality of opportunity. ”

“ With international division of labour it will happen that some countries—the old industrial countries—can only slowly expand their production for personal consumption, while making large strides in their production of producer [Pg 320] goods which is much more decisive for the heartbeat of economic life than the production of consumer goods. ”

“ These positive elements in the growth of national life were strengthened in any country where a territorial economic policy was adopted, so as to bring out a community of interest among the citizens, and to give solidarity to the whole social system. Definite schemes for the development of material resources, with a view to one supreme object, involved the suppression of local privileges and the increase of commercial intercourse ”

“ This quest requires as well a constructive attitude among all the nations of the free world toward expansion of trade and investment, that can give all of us opportunity to work out economic betterment. ”

“ These organizations shall, on a basis of equality, exercise a mutual influence on business and development policies, bear joint risks and joint responsibility for the expansion of the economic foundations of labour and the rise in labour productivity in production and trade, and shall share in the income earned through this cooperation according to their contribution to the realization of this income. ”

“ How the General Unification of Methods of Production Calls at First for an Increased Exportation of Capital from the Central Area and Checks the Immigration of Laborers.—A study of the causes of the interchanges which take place between the economic center and its environment shows that the movement of goods, the diffusion of modern methods of making goods, and the movements of capital and labor across the border of the economic society we are studying are interdependent. Opening a field for a profitable export trade increases the productivity of labor at home and tends to attract immigration. ”

“ As increased trade has led to increased integration of world economies, the growth of the world economy has become more dependent on achieving better coordination of macroeconomic policies and continued adoption of sound microeconomic policies to facilitate structural adjustment. Thus, it is crucial that cooperative solutions be found to the problems faced in the international economy. ”

“ The Parties acknowledge the importance of development in promoting inclusive economic growth, as well as the instrumental role that trade and investment can play in contributing to economic development and prosperity. Inclusive economic growth includes a more broad-based distribution of the benefits of economic growth through the expansion of business and industry, the creation of jobs, and the alleviation of poverty. ”

“ Towards this end, public policies should learn from the experience of more advanced countries by encouraging the establishment of investment houses quite distinct from the mutual funds. This will further strengthen the financial basis of the economy and assure sources of long-term funds for desirable productive ventures.
D. Economic Nationalism and Trade
Even as we are making provisions for expanding production, we have attended to increasing outlets for our output. ”

“ That it is an Object to Diversify Industry, and that Nations which have Various Industries are Stronger than Others which have not Various Industries. 116. It is not an object to diversify industry, but to multiply and diversify our satisfactions, comforts, and enjoyments. If we can do this by unifying our industry, in greater measure than by diversifying it, then we should do, and we will do, the former. It is not a question to be decided a priori, but depends upon economic circumstances. If a country has a supremacy in some one industry it will have only one. ”

“ The operations of trade need constant regulation and supervision; it is the business of the administrator and the legislator to provide them. But the maintenance of trade itself as the economic factor in the relationship between civilised and primitive communities, producers respectively of commodities desired by both, is synonymous with the recognition that the latter are possessed of elementary human rights. ”

“ I saw a business system which had grown up under free competition and equality of opportunity passing into trusts and other combines derived from the acquisition of lands containing the best supplies of coal, iron, oil, and other important raw materials, supported by railroad and banking connections and by tariffs directed against outside competition. ”

“ Under any form of society that can be foreseen in the immediate future, the need of close co-operation between the various parts of the world economic mechanism will tend to increase rather than to diminish, and it is therefore of great importance to have at hand a means of maintaining and facilitating the contacts between the different economic groups. ”

“ Thus, the general learning on vertical integration counsels an effort to find some acceptable middle ground between potential economies of integration derived from more efficient production and lowered transaction costs and potential diseconomies stemming from abuses of special positions made possible by integration. ”

“ The smallness of the part which foreign trade played in industry signifies that in the earlier part of the eighteenth century the industrial organism as a whole must be regarded as a number of tolerably self-sufficing and therefore homogeneous national forms attached to one another by bonds which are few and feeble. As yet there was little specialisation in national industry, and therefore little integration of national parts of the world-industry. ”

“ Besides the general integration or unification of industry implied by the common dependency of the specific trades upon these great industries, there are other forces engaged in integrating groups of trades. ”

“ The same set of social principles which decreed local rewards and local punishments for initiative and enterprise, or for the lack of them, was built upon the theory that "competition is the life of trade." Thus, while the present economic system, in its earlier stages tended to stimulate initiative, its form made co-operation difficult or impossible.
The ideal economic unit would be one capable of generating its own driving power, and given a legitimate exchange of commodities and services with other units, one that could maintain its own energy and efficiency. ”

“ They prevent a saving of labour and capital, which, if permitted to be made, would be divided in some proportion or other between the importing country and the countries which buy what that country does or might export. ”

“ He shewed, that the advantage of an interchange of commodities between nations consists simply and solely in this, that it enables each to obtain, with a given amount of labour and capital, a greater quantity of all commodities taken together. ”

“ It affects the whole world, and it draws you into new relationships with other parts of the world. Increasingly, your economy depends on exchanges with other countries – both imports and exports, of both goods and capital. ”

“ That, while providing revenue for the support of the general government by duties upon imports, sound policy requires such an adjustment of these imports as to encourage the development of the industrial interest of the whole country; and we commend that policy of national exchanges which secures to the working men liberal wages, to agriculture remunerative prices, to mechanics and manufacturers an adequate reward for their skill, labor, and enterprise, and to the nation commercial prosperity and independence. ”

“ The same rule which regulates the relative value of commodities in one country, does not regulate the relative value of the commodities exchanged between two or more countries.
Under a system of perfectly free commerce, each country naturally devotes its capital and labour to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole. ”

“ But nations do not, at least in modern times, emigrate en masse; and, while the labor and capital of a country remain in the country, they are most beneficially employed in producing, for foreign markets as well as for its own, the things in which it lies under the least disadvantage, if there be none in which it possesses an advantage.
The fundamental ground on which all trade, or all exchange of commodities, rests, is division of labor, or separation of employments. ”

“ It is established, that the advantage which two countries derive from trading with each other, results from the more advantageous employment which thence arises, of the labour and capital—for shortness let us say the labour—of both jointly. The circumstances are such, that if each country confines itself to the production of one commodity, there is a greater total return to the labour of both together; and this increase of produce forms the whole of what the two countries taken together gain by the trade. ”

“ Many lean and hungry peoples are being integrated into the global economy. Competition is particularly fierce for trade and investments. And the countries most likely to capture these investments are those that set out the appropriate policies. ”

“ This it accomplishes by enabling each, with a quantity of one commodity which has cost it so much labour and capital, to purchase a quantity of another commodity which, if produced at home, would have required labour and capital to a greater amount. To render the importation of an article more advantageous than its production, it is not necessary that the foreign country should be able to produce it with less labour and capital than ourselves. ”

“ By protective duties and bounties on exportation, by subsidies of all sorts to manufactures and national navigation, by the acquiring of transmarine colonies, by the creation of privileged commercial companies, by the inspection of manufacturing processes, by the perfecting of means of transportation and the suppression of interior custom-houses, every state strives to increase its means of production, to close its market to its competitors, and to make the balance of trade incline in its favor. ”

“ Upon this supposition, each country would gain whatever share of the joint saving of labour would otherwise fall to its lot, minus the cost of bringing from the other country the commodity which it imports. ”

“ Now lies before us the opportunity—with their stable governments and protection for enterprise and property, and our increased capital—now lies before us the opportunity to be allied to them also by the bonds of personal intercourse and profitable trade. ”

“ Under the rule of an unrestricted commercial intercourse throughout the world, the principle of supply and demand would control the movements of commerce without the aid of legislation; and, when once fully established, it would give stability and security to production everywhere. The products of the world entering into commerce would localize themselves where they naturally belong—where most could be produced with the least labor; and, population obeying the laws of equalization, would adjust itself to the demands of the respective interests of productive labor. ”