Page 100 - Introduction to Business

74 PART 1 The Nature of Contemporary Business

founding members: Indonesia, Malaysia, the Philippines, Singapore, and Thailand
(see Exhibit 2.9). With an initial interest in addressing regional security issues (pro-
tecting the region from big power rivalry and the spread of communism and cre-
ating a forum for resolving intraregional disputes), ASEAN has moved steadily
toward greater economic cooperation with a goal of establishing a free trade area
by 2007. ASEAN’s current membership stands at ten with Brunei joining in 1984,
Vietnam in 1995, Laos and Burma in 1977, and Cambodia in 1999. A growing
ASEAN concern is the economic ascendancy of China, which as a major low-cost
manufacturing center has been one of the world’s most attractive destinations for
foreign investment. China is embracing capitalism and flexing its political muscle
as it strives to become the world’s second superpower. For 18 of the past 20 cen-
turies China was the largest economy in the world, and many Chinese see the past
two centuries of underdevelopment and colonial occupation as an aberration that
must be overcome. To prevent the loss of jobs (and the loss of exports to China)
and also to tap China’s growing domestic consumer market, members of ASEAN
are hoping to develop a free trade agreement with China by 2010. For China, a free
trade agreement with ASEAN would mean strengthening its regional influence.

REGIONAL INTEGRATION IN LATIN AMERICA. Latin America has seen a patchwork of
constantly changing regional trade and investment agreements (see Exhibit 2.10).
This is a result of unrealistic integration goals, political paralysis, and poor economic
policies that have undermined implementation of most trade agreements so far,
forcing participating countries to regularly change their alliances, objectives, and
approaches. The first step toward free trade in Latin America was taken with the
signing of the Treaty of Montevideo in 1960, creating the Latin American Free Trade

EXHIBIT 2.9

ASEAN

PACIFIC
OCEAN

MYANMAR
(BURMA)
LAOS
VIETNAM
THAILAND
CAMBODIA PHILIPPINES
(KAMPUCHEA)
BRUNEI
DARUSSALAM
MALAYSIA
SINGAPORE
INDIAN OCEAN

INDONESIA

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