ECONOMICS QUESTIONS

1. The Central American Free Trade Agreement (CAFTA) expands the economic integration of Central America and the United States similar to the way that the North American Free Trade Agreement (NAFTA) increased the integration of Canada, the United States and Mexico in the early 1990s. While the integration falls short of that seen in Europe as a result of the European Union there is no discussion of a common currency within CAFTA, for example it nonetheless is intended to facilitate the movement of goods and services in and among the various signatories.

Central America has long been plagued by political instability and civil wars that have been remarkable for their violence and the disruption caused to the economic infrastructure. It is only in recent years that the countries have begun to recover, economically, and that regional brands have started to come into their own.

A company that sells soccer equipment to El Salvador would certainly consider expanding its promotional efforts in the region if CAFTA is approved. Soccer is popular throughout the world, and particularly so in Latin America. A company selling in this region could begin to leverage the success of its goods in El Salvador and enter the other markets, beginning with those bordering El Salvador and then moving outward, once CAFTA is approved.

Initially, promotional efforts should include enlisting well-known soccer figures to be associated with the product. Their likenesses could

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e trend. More likely, there will be downward pressure on wages in developed countries in order to compete with those overseas, and upward pressure on wages overseas, at least to some degree, until some type of equilibrium is reached. Given that human resources cannot freely move across borders as does capital immigration remains a political issue that places far more limits on the free movement of humans than on machinery this question of wages and outsourcing is likely to remain highly politicized for some time to come. Information, more than any other commodity, has always found ways to move around the world and across borders despite the sometimes drastic measures taken to limit its availability. Information has always followed traders, whether the traders moved in camel-led caravans or on multi-storied ocean-going freighters. Today, mobile phones, the Internet and television send information around the world that is nearly impossible to control. Some countries have sought to control access to the Internet, or to monitor its use by citizens. Still, newspapers, books and leaflets can flow freely with the ability of anyone to self-publish materials from their desktop. Countries will no doubt continue to try to regulate

Category: Economics - E