amanaimagesRF/amana images/Getty Images
Asia-Pacific Economic Cooperation is an association of 21 countries in Asia and on the Pacific Rim -- those with boundaries on the Pacific Ocean -- working to advance the region's economic integration and prosperity. It was founded in 1989 and since that time it has worked to reduce tariffs and other barriers to trade throughout the region. It has done this by facilitating business relationships between and among member nations and providing an economic forum for its members, which represent about 40 percent of the world's population and 55 percent of its economy.
APEC has linked the established economies of countries like Japan and the United States with mid-level economies like Korea and Chinese Taipei and developing economies like Vietnam and Paupa New Guinea by promoting and facilitating trade agreements. This opens up new markets for the larger economies and transforms emerging economies by creating new industries, raising millions of people out of poverty.
The subject of tariffs is controversial. A tariff is a fee imposed by a nation on imported goods that compete with products produced domestically. APEC seeks to lower or eliminate tariffs in order to promote the free exchange of goods between countries. This is beneficial to developing countries where labor costs are low; low tariffs give them a price advantage over the more expensive goods produced in wealthier countries. So while the policy of broad tariff reduction is beneficial to countries with emerging economies, it is not necessarily seen as beneficial to companies in more developed countries as they can be priced out of competition. However, tariffs are often used as leverage or for retaliation. If one country imposes a tariff on goods from another country, that country could reciprocate, damaging the exporting businesses in the first country. Or, rival trading blocks of countries could form that could adversely affect foreign policy agreements and global security.
APEC provides an important forum for economic innovation and creates programs and action plans that catalyze the flow of private capital into member nations. This results in infrastructure investments and rechnological development induce innovation and entrepreneurship, which in turn strengthen markets and integrate economies.
Sharing of Technology
Joint research and development projects between member nations are developed through APEC. These contribute to deeper partnership relationships, which stabilize security and provide for continuous economic growth.
Small and medium enterprises are critical factors in a healthy economy. APEC’s focus on boosting the development of SMEs is reflected in the fact that 90 percent of all companies participating in APEC are SMEs. Through APEC partnerships, economic and technical cooperation has increased among member nations.
Lisa Dorward was a corporate financial executive and business consultant for more than 15 years before becoming a writer in 2003. She has B.A. degrees in both history and creative writing and earned her M.F.A. in creative writing in 2008, specializing in novel-length historical fiction.