Trading Bloc with a Difference: The Commonwealth Transcends Geography, Enjoys a Unique Cultural Advantage and Challenges Conventional Thinking on Regional Trading Groups

By Johnson, Michael | European Business Forum, Winter 2002 | Go to article overview

Trading Bloc with a Difference: The Commonwealth Transcends Geography, Enjoys a Unique Cultural Advantage and Challenges Conventional Thinking on Regional Trading Groups


Johnson, Michael, European Business Forum


Almost by definition, trading blocs are made up of expanded neighbourhoods of nations--contiguous states that share regional interests and can trade efficiently without incurring heavy transport costs. This is an attractive model in the global economy, with more than a dozen examples functioning successfully and now a possible ASEAN-China Free Trade Area taking shape, always within the rules of the World Trade Organisation.

There is one major exception to the geographical imperative, the Commonwealth--the successor body to the old British Commonwealth--which seems able to transcend geography and achieve a measure of cohesion through its members' shared business cultures and political history. A new focus on the economic development of the Commonwealth is helping it survive and prosper in spite of its widely dispersed membership, the variation in the stages of development of the individual countries and the decline of bloc-based protectionism.

Commonwealth countries, many of them former British colonies, benefit from similarities that have taken on crucial importance in today's fast-moving international economy: a common working language (English), broadly comparable, government and legal systems, and corresponding business practices. This so-called 'Commonwealth effect' is what member countries are attempting to exploit today.

Economists at Reading University in the United Kingdom have estimated that Commonwealth-based companies doing business within the bloc can enjoy a cost advantage of 15-20 per cent due to reduced 'foreignness' among the partners.

What is 'foreignness'? As any multinational will attest, understanding local cultures in a new foreign market can be costly and time-consuming. Grasping legal systems and business conventions in a new country can take two to three years, often impeding the start-up of manufacturing or marketing. For example, US, British and French oil majors went into Russian-speaking Kazakhstan after the break-up of the USSR only to discover that the practices of the old Communist regime had changed radically. Unsurprisingly, Moscow was out of the picture.

[ILLUSTRATION OMITTED]

The personalised presidency of this newly independent state in the former Soviet Union held a firm grip on raw materials, and no investment or expansion of projects could be achieved without the president's blessing. This meant delays and mounting costs while the new system could be understood and an audience with the president could be obtained. Strategy thus had to shift from patient negotiation with the state oil ministry to penetration of the presidential suite. Only when a project was approved by the president could the investor company begin planning and exploitation.

By contrast, businesses in two countries of the Commonwealth, say Kenya and Nigeria, might be run by men who both attended the London School of Economics, who have networks in other Commonwealth countries perhaps with the same shared background, and who therefore tend to connect on business matters more quickly, thus more cheaply. Conflicts over markets will still arise but 'foreignness' looms as a lesser part of the problem.

In other words, all things being equal, it is often simpler and less costly for a Commonwealth-based company to do business inside the Commonwealth than outside it.

The result is a de facto trading bloc and a unique marriage of developed and emerging countries. The Commonwealth serves as a framework for sharing business expertise and as a by-product helps build up the poorer countries' economic muscle. The London-based Commonwealth Business Council (CBC) drives this development with practical programmes that involve the private sector for commercial guidance, ideas, funding and management expertise.

The economic weight of the Commonwealth is often underestimated.

Today, 13 of the world's fastest-growing economies and many of the developing world's leading nations a total of 54 countries--collaborate within the Commonwealth.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Trading Bloc with a Difference: The Commonwealth Transcends Geography, Enjoys a Unique Cultural Advantage and Challenges Conventional Thinking on Regional Trading Groups
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.