Benefits and drawbacks of Venezuala joining Mercosur

Abstraction

Venezuela is a state located in north South America and is one of the largest manufacturers of oil and natural gas in the universe. Exports of crude oil make over 50 % of authorities gross. Along with crude oil, Venezuela has other natural resources, such as coal, nickel, diamonds, and gold and exports of these natural resources are presently turning and developing. Mercosur is a largest trade axis of South America and Venezuela late signed the understanding as a 5th member. Since Venezuela and Mercosur have major exports in different industry, it will make comparative advantages within the member states. However, it may make trade recreation and Venezuela might lose some of its duty gross. From the company ‘s point of position, they would be able to do other foreign company relationship that already established with member state of Mercosur. Free motion of employment within the member states of Mercosur would increase mobility for the employees. Therefore, company would engage better skilled and qualified employees. However, at the same clip, it means that more rivals would come in into the market and they might hold better merchandises with lower monetary value.

Venezuela is a state located in north South America and is one of the largest manufacturers of oil and natural gas in the universe. It chiefly produces crude oil oil, which is a key of Venezuelan economic system. Harmonizing to National Statistical Coordination Board, it takes to about 28 % GDP in 2009, 82 % of exports, and over 50 % of authorities gross ( Nation Statistical Coordination Board, 2010 ) . Exports of crude oil make Venezuela largely trade excess. Along with crude oil, Venezuela has other natural resources, such as coal, nickel, diamonds, and gold and exports of these natural resources are presently turning and developing ( Bureau of South America, 2009 ) . Venezuela has mixed economic system and its chief economic sector is petroleum. As National Statistical Coordination Board stated, it has been made rapid growing: 16.8 % of economic system growing reported in 2004. Its GDP growing rate was 4.8 % in 2009 and GDP was $ 326 billion in 2009 ( Nation Statistical Coordination Board, 2010 ) .

Mercosur is a largest trade axis of South America and is established by Argentina, Brazil, Paraguay, and Uruguay in 1991 and Venezuela late signed a rank understanding ( Bureau of South America, 2009 ) . It is purposed to do economic integrating, political understanding, and free trade between the member states ( Bureau of South America, 2009 ) . They chiefly eliminated barriers to regional trade, such as duties, custom responsibilities, and taxed and affect free motion of goods and services of member states.

Benefits and drawbacks as state

As Venezuela has been accepted as a member state of Mercosur, there are some benefits are drawbacks from state ‘s point of position.

Harmonizing to the study of exports of Venezuela and Mercosur by parts, Venezuela and Mercosur have major exports in different industry ( Nation Statistical Coordination Board, 2010 ) .

A study showed that Venezuela exported 75 % of mineral fuels, 10 % of manufactured goods and related merchandises, and 5 % of chemical merchandises and Mercosur exported 25 % of nutrient and unrecorded animate beings, 19 % of machine and equipment, and 18 % manufactured goods and related merchandises in 2009 ( Nation Statistical Coordination Board, 2010 ) .

While Venezuela exports chiefly Petroleum and natural resources, such as coal, Fe, and Ni and chemical merchandises Mercosur exports nutrient and machine and equipment more. Since they have different strong economic sectors, it will make comparative advantages within the member states and competitory power to other non-member states.

Harmonizing to Bureau of South America, the free trade and easy motion of non merely goods and services, but besides employment by fall ining Mercosur would make more occupations with sensible hours and decrease unemployment rate ( Bureau of South America, 2009 ) . It gives the opportunity persons to work in better environment and finally hike economic system of each member states. However, it may make trade recreation. By fall ining Mercosur, opportunity of covering right provider would lose and acquire less efficient providers within Mercosur. Since duties and other custom responsibilities from international trade are eliminated, Venezuela might lose some of its duty gross. In add-on, while free motion creates mobility of employment along with more occupations, concern expressions for lower employment within Mercosur and it might ensue less occupations or working chances in their ain states.

Benefits and drawbacks as company

Beside all the benefit and drawbacks from state ‘s point of position, there are besides benefits and drawbacks for the company itself. By fall ining Mercosur, company would be able to do other foreign company relationship that already established with member state of Mercosur. Although less duty and usage responsibilities would ensue in diminishing authorities gross, it would let company trade goods and services with less cost and more net income. The company might take down their monetary value and make competitory power and do more gross. In add-on, free motion of employment within the member states of Mercosur would increase mobility for the employees. Therefore, company would engage better skilled and qualified employees and employees hired from other states would give the benefits of foreign market to the company. Company besides expands or changes its work field to take down employment pay so they can make more gross with less employment costs. If company makes money and expands its concern, economic system besides grows consequently.

Benefits of something ever can be the drawbacks in other side. Company would get foreign relationship and riddances of barriers within the member states of Mercosur would do company less cost. However, at the same clip, it means that more rivals would come in into the market and they might hold better merchandises with lower monetary value. If a company do n’t hold any specific competitory power, it might be difficult to last without more investing in R & A ; D and its merchandises. Besides, due to free employment motion, company might lose valuable employees unless they invest and provide better work conditions to the employee.

The benefits and drawbacks of fall ining Mercosur as the county of Venezuela and as the company have been addressed. As Venezuela has been accepted by 5th member state of Mercosur, there are some addendums to extinguish the drawbacks and to maximise the benefits. First, Venezuela needs to develop common relationship with other member states of Mercosur and attempts to larn about the other state ‘s civilization and usage. In add-on, precise apprehensions of other member states are needed in economic system, political issues, and foreign relationship with non-member states.

From the company ‘s point of position, company demand to engage person who has the cognition and experience in other member state in order to acquire familiar to its local state of affairs and to forestall the errors from deficiency of experiences. Besides, company needs to develop its competitory schemes, since tonss of rivals from other state might take company ‘s client. Besides developing the accomplishments and engaging professionals, company needs to supply better working environment. Otherwise, its skilled and valuable employees might travel to other company or even other state.

Decisions

Joining Mercosur would include tonss of benefits and drawbacks as the state and as a company. ) . Mercosur is purposed to do economic integrating, political understanding, and free trade between the member states. They chiefly eliminated barriers to regional trade, such as duties, custom responsibilities, and taxed and affect free motion of goods and services of member states. Different economic sectors between Venezuela and other Mercosur member states, it will make comparative advantage. And free motion of employment within the member states of Mercosur would increase mobility for the employees. Although less duty and usage responsibilities would ensue in diminishing authorities gross, it would let company trade goods and services with less cost and more net income. In add-on, free motion creates mobility of employment along with more occupations, concern expressions for lower employment within Mercosur but, company might lose valuable employees unless they invest and provide better work conditions to the employee. Venezuela needs to develop common relationship with other member states of Mercosur and company needs to develop its competitory schemes.