The Challenges of a Transformed World Economy

Abstract

The world trading system is rapidly approaching a major turning point. In the three major economies that continue to dominate and shape the world economy, new and profound forces are stirring. In Western Europe, a unified and massive market is hesitantly but surely coming into existence and, surrounding the core of the European Economic Community (EEC), a larger European Economic Space is forming with the collapse of the Soviet East European Empire. In North America, with the signing of the Free Trade Agreement between Canada and the United States, a regional trading arrangement is taking shape that could eventually include Mexico and other countries of Latin America. In the Pacific Basin, Japan is taking the lead in creating a highly integrated regional economy through the instrumentalities of trade, foreign aid, and foreign investment.