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Trans-Pacific Partnership

  • The Trans-Pacific Partnership (TPP) was a proposed trade agreement among 12 countries bordering the Pacific Ocean, including the United States, Canada, Japan, Australia, and several Southeast Asian and Latin American nations.
  • The TPP aimed to deepen economic integration, promote trade liberalization, and enhance regulatory coherence among its member countries, covering various sectors such as goods, services, investment, intellectual property, and digital trade.
  • Negotiations for the TPP began in 2005 and concluded in 2015, but the agreement was never ratified. However, many of its provisions were later incorporated into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which came into force in 2018.

How TPP Impacted Regional Integration and Economic Cooperation:

  1. Trade Liberalization and Market Access:
    • TPP aimed to liberalize trade and expand market access among its member countries by eliminating tariffs, quotas, and other trade barriers on goods and services.
    • Reduced trade barriers facilitated cross-border trade, supply chain integration, and market access for businesses, while promoting efficiency gains and cost savings for consumers within the TPP region.
  2. Investment Protection and Regulatory Harmonization:
    • TPP included provisions for investment protection, regulatory coherence, and intellectual property rights (IPR) protection to promote business certainty, innovation, and economic development within the member countries.
    • Common standards, regulations, and dispute resolution mechanisms fostered regulatory convergence and cooperation among TPP nations, while enhancing investor confidence and market access for companies operating in the region.
  3. Digital Trade and E-commerce Facilitation:
    • TPP addressed digital trade and e-commerce issues by promoting cross-border data flows, digital innovation, and electronic commerce among its member countries.
    • Provisions for data protection, cybersecurity, and online consumer protection facilitated digital trade and technology adoption within the TPP region, while promoting interoperability, privacy rights, and digital rights for users and businesses.

Strategies for Implementing TPP:

  1. Negotiation and Consultation Process:
    • TPP negotiations involved extensive consultation and engagement with stakeholders, including government agencies, businesses, civil society organizations, and academic institutions.
    • Consultative processes, public hearings, and stakeholder engagement mechanisms ensured transparency, inclusivity, and accountability in TPP negotiations, while promoting dialogue, consensus-building, and support for the agreement among diverse stakeholders.
  2. Capacity Building and Technical Assistance:
    • TPP member countries provided capacity-building support and technical assistance to help less developed countries and small businesses adapt to the requirements of the agreement.
    • Training programs, workshops, and funding initiatives promoted skills development, regulatory compliance, and market access for businesses and entrepreneurs within the TPP region, while fostering inclusive and sustainable economic growth.
  3. Implementation and Compliance Monitoring:
    • TPP member countries established mechanisms for implementing and monitoring compliance with the agreement’s provisions, including regular reviews, reporting requirements, and dispute settlement procedures.
    • Compliance monitoring frameworks, institutional arrangements, and enforcement mechanisms ensured that TPP obligations were effectively implemented, enforced, and updated to reflect changing economic conditions and regulatory priorities within the region.

Impact of TPP:

  1. Trade Expansion and Economic Growth:
    • TPP aimed to stimulate trade expansion and economic growth in the Asia-Pacific region by promoting market access, investment, and innovation among its member countries.
    • Increased trade volumes, investment flows, and business opportunities were expected to generate economic benefits, job creation, and income growth within the TPP region, while fostering regional integration and competitiveness in the global economy.
  2. Geopolitical Dynamics and Strategic Alignment:
    • TPP had geopolitical implications and strategic implications for the Asia-Pacific region, as it aimed to shape regional economic architecture, promote rules-based trade, and counterbalance China’s influence in the region.
    • TPP member countries sought to strengthen economic ties, promote stability, and advance shared interests in areas such as security, democracy, and human rights, while enhancing regional cooperation and integration through economic diplomacy and strategic partnerships.
  3. Domestic Policy Reforms and Regulatory Convergence:
    • TPP encouraged domestic policy reforms and regulatory convergence among its member countries to align with international standards, best practices, and commitments under the agreement.
    • Structural reforms, institutional changes, and legal reforms promoted transparency, accountability, and good governance within TPP nations, while facilitating market access, business environment improvements, and economic development.

Conclusion:

The Trans-Pacific Partnership (TPP) aimed to foster regional integration, promote trade liberalization, and enhance Economic cooperation among its member countries in the Asia-Pacific region. While the agreement was not ratified in its original form, its successor, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), builds upon TPP’s objectives and provisions, contributing to regional economic integration, market openness, and regulatory coherence in the Asia-Pacific region. As countries continue to pursue regional economic integration initiatives and trade agreements, cooperation, dialogue, and solidarity remain essential for advancing shared prosperity, stability, and development in the dynamic and interconnected global economy.

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Connected Economic Concepts

Market Economy

The idea of a market economy first came from classical economists, including David Ricardo, Jean-Baptiste Say, and Adam Smith. All three of these economists were advocates for a free market. They argued that the “invisible hand” of market incentives and profit motives were more efficient in guiding economic decisions to prosperity than strict government planning.

Positive and Normative Economics

Positive economics is concerned with describing and explaining economic phenomena; it is based on facts and empirical evidence. Normative economics, on the other hand, is concerned with making judgments about what “should be” done. It contains value judgments and recommendations about how the economy should be.

Inflation

When there is an increased price of goods and services over a long period, it is called inflation. In these times, currency shows less potential to buy products and services. Thus, general prices of goods and services increase. Consequently, decreases in the purchasing power of currency is called inflation. 

Asymmetric Information

Asymmetric information as a concept has probably existed for thousands of years, but it became mainstream in 2001 after Michael Spence, George Akerlof, and Joseph Stiglitz won the Nobel Prize in Economics for their work on information asymmetry in capital markets. Asymmetric information, otherwise known as information asymmetry, occurs when one party in a business transaction has access to more information than the other party.

Autarky

Autarky comes from the Greek words autos (self)and arkein (to suffice) and in essence, describes a general state of self-sufficiency. However, the term is most commonly used to describe the economic system of a nation that can operate without support from the economic systems of other nations. Autarky, therefore, is an economic system characterized by self-sufficiency and limited trade with international partners.

Demand-Side Economics

Demand side economics refers to a belief that economic growth and full employment are driven by the demand for products and services.

Supply-Side Economics

Supply side economics is a macroeconomic theory that posits that production or supply is the main driver of economic growth.

Creative Destruction

Creative destruction was first described by Austrian economist Joseph Schumpeter in 1942, who suggested that capital was never stationary and constantly evolving. To describe this process, Schumpeter defined creative destruction as the “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” Therefore, creative destruction is the replacing of long-standing practices or procedures with more innovative, disruptive practices in capitalist markets.

Happiness Economics

Happiness economics seeks to relate economic decisions to wider measures of individual welfare than traditional measures which focus on income and wealth. Happiness economics, therefore, is the formal study of the relationship between individual satisfaction, employment, and wealth.

Oligopsony

An oligopsony is a market form characterized by the presence of only a small number of buyers. These buyers have market power and can lower the price of a good or service because of a lack of competition. In other words, the seller loses its bargaining power because it is unable to find a buyer outside of the oligopsony that is willing to pay a better price.

Animal Spirits

The term “animal spirits” is derived from the Latin spiritus animalis, loosely translated as “the breath that awakens the human mind”. As far back as 300 B.C., animal spirits were used to explain psychological phenomena such as hysterias and manias. Animal spirits also appeared in literature where they exemplified qualities such as exuberance, gaiety, and courage.  Thus, the term “animal spirits” is used to describe how people arrive at financial decisions during periods of economic stress or uncertainty.

State Capitalism

State capitalism is an economic system where business and commercial activity is controlled by the state through state-owned enterprises. In a state capitalist environment, the government is the principal actor. It takes an active role in the formation, regulation, and subsidization of businesses to divert capital to state-appointed bureaucrats. In effect, the government uses capital to further its political ambitions or strengthen its leverage on the international stage.

Boom And Bust Cycle

The boom and bust cycle describes the alternating periods of economic growth and decline common in many capitalist economies. The boom and bust cycle is a phrase used to describe the fluctuations in an economy in which there is persistent expansion and contraction. Expansion is associated with prosperity, while the contraction is associated with either a recession or a depression.

Paradox of Thrift

The paradox of thrift was popularised by British economist John Maynard Keynes and is a central component of Keynesian economics. Proponents of Keynesian economics believe the proper response to a recession is more spending, more risk-taking, and less saving. They also believe that spending, otherwise known as consumption, drives economic growth. The paradox of thrift, therefore, is an economic theory arguing that personal savings are a net drag on the economy during a recession.

Circular Flow Model

In simplistic terms, the circular flow model describes the mutually beneficial exchange of money between the two most vital parts of an economy: households, firms and how money moves between them. The circular flow model describes money as it moves through various aspects of society in a cyclical process.

Trade Deficit

Trade deficits occur when a country’s imports outweigh its exports over a specific period. Experts also refer to this as a negative balance of trade. Most of the time, trade balances are calculated based on a variety of different categories.

Market Types



This post first appeared on FourWeekMBA, please read the originial post: here

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