In
the modern era, Europe provides easily the most famous and most successful
example of regionalism at work. Early theories of regionalism were almost
entirely Euro-centric, and many of the ideas, which first emerged in response
to the European experience are still influential today. In particular, Haas’s
concept of functional spillover represents a watershed in the development of
the literature, and as we will later argue, is still of central importance
today.
Haas
is generally regarded as the ‘father’ of a theory called neofunctionalism. His
theory (and its theoretical antecedent, functionalism) arose out of the
European integration experiences in the early post-war years. The idea of a united Europe has historical roots
stemming back much further than the 20th Century, but in its modern
form, it began as the European Coal and Steel Community (ECSC) in 1951, which
expanded to become the European Economic Community (EEC) through the Treaty of
Rome in 1957.
The
original theory of functionalism was designed as a normative explanation for
the establishment of mechanisms such as the ECSC to ensure peace by moving
beyond nationalism. According to Mitrany, its best-known advocate, “the task
facing us is how to build up the reality of a common interest in peace… not a
peace that would keep nations quietly apart, but a peace that would bring them
actively together; not the static and strategic view of peace, but a social
view of it… We must put our faith not in a protected but a working peace.”
Functionalist theory claimed that co-operation by governments in the
creation of technical task-orientated welfare agencies (such as the WHO and
Disarmament Organizations) could unite people across borders and “sidestep
still blazing national loyalties”. Simply put, people were meant to learn to
think in non-national terms because of patterns in technical co-operation.
While
functionalism was limited to the formation of non-political institutions,
neofunctionalism built on it to eliminate the artificial separation of politics
from economics by including the notion of ‘functional spillovers’. Writers such
as Haas, Lindberg and Schmitter, using the framework of functionalism and
building on the theories of writers such as Karl Deutsch, suggested that increased trans-border
exchanges and co-operation in technical areas (such as the production of coal
and steel) would lead to increased transnational interdependence and in turn
create functional spillovers in other realms, essentially allowing the
integration process to be driven under its own steam. Haas noted that “certain kinds of
organizational tasks most intimately related to group and national aspirations
can be expected to result in integration even though the actors
responsible for this development may not deliberately work towards such an
end.”
Accordingly,
initial co-operation on the creation of common institutions in non-political
(and hence non-controversial) policy areas is, over time, not only deepened,
but also widened to include the realm of other connected policy areas. The
deliberate design of institutions is seen as the most effective means for
solving common problems, and these in turn are instrumental for “the creation
of functional as well as political spill-over and ultimately to a redefinition
of group identity around the regional unit.” Importantly, governments of member states are
locked in to the integration process and they have little room to maneuver. The
structural and functional implications of trans-border exchanges inevitably
coerce national governments into greater degrees of co-operation, coordination
and integration.
Neofunctionalism
spawned a large volume of literature, and work on regional integration became highly
prominent in well-established US journals such as International Organization. The emphasis on functional pressures,
growing interdependence and the significance of non-state actors stood in sharp
contrast to the dominant orthodoxy of realism in American International
Relations and laid some ground for the development of contemporary
international political economy (IPE). Elsewhere, the initial successes in Europe were imitated
by a number of comparable attempts in the Middle East, Africa, the Americas and
the Pacific, and “the world was indeed filled… with proposals for NAFTA, PAFTA,
LAFTA and evermore.” By the end of the 1960s, however, it became
clear that the regionalist challenges had failed to live up to their promise.
There had been few tangible results outside of Europe, and in Europe itself,
the credibility of the theory had suffered irreversible damage with the
‘Empty-Chair crisis’ of 1965/66, initiated by de Gaulle’s adamant refusal to
proceed with certain aspects of integration he deemed contrary to French
national interests, despite the benefits that accrued to French
farmers through the Common Agricultural Policy. The integration process was
dominated by a downturn in economic circumstances and subjected with apparent ease to stalling by political elites.
In 1975 Haas published his now famous The Obsolescence of Regional
Integration Theory where he declared that regional integration theory was
“obsolete in Western Europe and obsolescent – though still useful – in the rest
of the world”. Haas conceded that neofunctionalism had
failed to take into account the importance of government action in any moves
towards regional integration in Europe and had failed to recognize the new
interdependence patterns transcending regions in other areas. Other critics
suggested that neofunctionalism had exaggerated both the expansive effect of increments
within the economic sphere and the gradual politicization effect of spillover.
Regionalism and the End of the Cold War
A
number of changes in the international political economy of the 1980s saw a
worldwide resurgence of interest in regionalism, concurrent with the rise of
neoliberal economic theory as the dominant new force in the global economic
system and changing global power relations. This second-wave of regionalism was
given added impetus with the end of the Cold War and the new wave of
democratization which swept through Eastern Europe, Africa and Latin America in
the late 1980s and early 1990s.
The
demise of early regional initiatives had, by the early 1980s, “opened greater
space for the promotion of new co-operative ventures at the regional and sub
regional level”. In developing countries, strategies of
import-substitution were replaced by structural adjustment programs reflecting
a shift towards outward-orientated policies as a panacea for development in an
increasingly interdependent global economic system. Earlier attempts at
regionalism had been seen as a way to enhance collective security and social
welfare, but the growing pace at which national economies were becoming
interdependent on a global scale brought about a fundamental shift in the way
regionalisation was conceived. The apparent dangers of marginalization from
world markets led to an added sense of vulnerability for many developing
countries, and the fashioning of new and more effective regional organizations
was seen as one way of combating the dangerous isolation in which many found
themselves.
As
the issue of economic security became an increasingly important element of
international relations, the unveiling of a reinvigorated European plan in 1986
for a Common Market by 1992 and the beginning of negotiations for a Free Trade
Agreement between the United States and Canada in the same year indicated to
many developing countries that regionalism could serve as a supplement or even
as an alternative to the multilateral system of GATT. This represented a major policy shift by the
United States, which had, until the 1980s, emphasized the promotion of free
trade through multilateralism. NAFTA was a watershed in the sense that it
signaled a move by the world’s largest economy away from mere tolerance towards
acceptance of regionalism as an effective trade-liberalizing strategy. Just as
the first wave of European integration had inspired imitations around the
world, so the revival of European regionalism and the creation of NAFTA saw the
beginnings of negotiations on groupings such as the Arab Maghreb Union, the
Andean Pact, Mercosur, ASEAN and the African Union.
The
revival of regionalism was cemented by the collapse of the Soviet Union at the
end of the 1980s. With the end of an international bipolar system, the idea of
the region was thrust onto the centre stage in international politics. The
relaxation of East-West tensions brought about an improved atmosphere for
international co-operation and a newly enhanced status for bodies such as the
UN. In many ways, the logic of regional co-operation was regarded as a natural
outgrowth of the processes at work on the global stage. The end of bi-polar tensions also meant that
regional security issues for much of the developing world were no longer
dominated by questions of balance between the old superpowers. In the post-Cold
War world, developing countries were no longer assured of their value as
bargaining chips and were forced to develop new strategies to procure aid,
trade and security.
Market-Based Theories of Regionalism
Since
the 1980s, regional integration theory has been largely dominated by a focus on
its effects on trade, financial flows and economic integration, as well as an
increasing concern over its relationship with forces of economic globalization
and multilateralism. The debate over this aspect has been of particular concern
to economists, especially with regard to the patterns of interaction between
regional and global trade. For many, the growing prevalence of ‘economic
regionalism’ defined as “the design and implementation of a set of preferential
policies within a regional grouping of countries aimed at the encouragement of
the exchange of goods and/or factors between members of the group” is the central feature of regionalism’s
‘second-wave’. Theories on regional market integration (often grounded in the
tradition of neoliberal economics) thus play a central role in the contemporary
debate on regionalism, as they focus their attention on the formation of
preferential trading agreements commonly termed ‘trading blocs’, the most
common form of regional organization in the modern international system. Since
the end of the Cold War, there has been a growing international consensus on
the appropriateness of neoliberal strategies for regional success, falling
under the umbrella of what is known as ‘open regionalism’, a form of market
integration in which regionalisation efforts are explicitly outward-looking, in
contrast to the fortress-like mentality which governed earlier efforts.
One
of the most important questions asked by economists about the new regionalism
is how regional integration should be modeled and whether the associated
potential gains for member states is welfare-creating or welfare-decreasing.
The classic early work on Custom Unions by Jacob Viner provides a good starting
point. Viner argued that the elimination of
intra-area tariffs and the stimulation of regional industries through the
imposition of a common external tariff would result in trade creation along the
principle of comparative advantage as countries specialize around efficient
industries, and trade diversion from lower cost exporters to the region. In
other words, trade is created by the switch from a high cost external producer
to a low-cost regional producer, and is diverted by the shift from a low-cost
external producer to a high-cost regional producer. The welfare effects of trade creation are
positive, whereas the effects of trade diversion are negative, suggesting that
the desirability of regional trade agreements largely depends on the
circumstances. Subsequent authors have shown that Viner’s conclusions have
limited validity, yet his concepts remain highly influential in policy debates.
Balassa,
writing at the same time as Haas and the neofunctionalists, and borrowing from
their concept of functional spillover, suggested that regional integration
occurs in a linear progression, with the completion of each stage being a
necessary condition for the successful implementation of the next. Free
market forces set into play at one stage are anticipated to have a spillover
effect to the next, so that its implementation becomes an economic necessity. The associated caveat is
that because economic integration has its own costs, resources will be
misallocated if a more advanced stage is embarked upon before a lower stage is
completed.
Balassa’s work continues
to inform popular views of integration studies, and is still the model of choice for institutions such as
the World Bank with regard to looking at levels of economic integration.
Preferential or Free Trade Area – members reduce or eliminate barriers to
trade in goods (and increasingly services) among members, but each member is
free to maintain different barriers against non-members. This latter
characteristic requires members to develop rules of origin to prevent imports
from third countries from being transhipped through the member country with the
lowest tariffs.
Customs Union – moves
beyond a free trade area by establishing a common external tariff on all trade
between members and non-members. Customs unions typically contain mechanisms to
redistribute tariff revenue among members.
Common Market – deepens
a customs union by providing for the free flow of factors of production (labour
and capital) in addition to the free flow of outputs.
Economic and Monetary Union – members implement a common currency and
common macroeconomic policies.
Total Economic Integration – consists of the unification of monetary and
fiscal policies, along with the creation of a supranational authority that has
the power to enforce decisions.
Much of the work on market integration, however, suggests that success
in realising these gains is predicated on a number of conditions. Firstly, integration
must appear to be relatively costless to participating members at the outset,
making the planning of initial steps very important.Negative perceptions
will arise when it is perceived that costs and benefits are being distributed
unequally among regional partners, specifically, when the most developed
country or countries in the region experience an overwhelmingly
disproportionate amount of the gains. They become ‘poles of development’, while
the less developed countries in the region become ‘poles of stagnation’. Planning for economic
integration needs to take this scenario into account, and often may need to
introduce some kind of redistributive mechanism to allow all member countries
to experience similar relative gains from regionalisation.
Another requirement for effective integration is that there must be some
convergence in national economic objectives, and both tariff and non-tariff
barriers must be reduced in order to encourage higher levels of intra-regional
trade. In cases where regional
members produce little that neighbouring states want to buy, the potential
gains from lowered barriers to trade are minimal, as has been the case in
Africa, where the failure of integration schemes has been blamed by many
authors on the low levels of intra-regional trade present between members in
the first place. Other problems for integration schemes in the developing world
have been the minimal level of industrialisation in neighbouring countries,
which leaves few opportunities for integrating factors of production into
common productive processes, the existence of
significant non-tariff barriers to trade and investment (such as inefficient
bureaucracy, licensing and payment systems, corruption, the potential for
government expropriation and transport
difficulties) which remain even after formal intra-regional trade barriers have
been reduced or eliminated. There is also the
growth in the importance of capital flows, which has made the integration of
financial markets an additional priority since the original formulation of
customs union theory.
Finally, economists are
unclear on the issues of optimal geographic size of regional groupings and the
desirability of higher forms of regional monetary and policy integration. The
argument is made that externalities and economies of scale mean that a
jurisdictional scale larger than the borders of individual member countries
allows for enhanced ability to provide public goods. On the other hand,
the likelihood of significant diseconomies of scale means that the optimal area
should definitely be smaller than the world economy. The level of integration
will largely determine where the optimal area of a regional grouping will
situate itself in between these two extremes. For example, analysts argue that
economic diversity will favour a monetary union. Shocks are neutralized as they
hurt one part of the region while favoring others.
When speaking of the new wave of regionalism,
the economic school defines it as having primarily taken the form of what has
been called ‘open regionalism’.
This is a form of market integration which extends and applies the
central assumptions of neoliberal economics at the regional and global level. Unlike the old
regionalism, which was protectionist, inward-looking and relied on collective
strategies of self reliance, the new regionalism is open, outward-looking and
inclusive. It prescribes that policy should be directed towards the incorporation of the region into
the world economy, a goal best achieved through the elimination of obstacles to
trade and investment. Emphasis
is placed on export-led growth, and a greater priority is given to
extra-regional, rather than intra-regional trade. Thus integration is
consistent with “an outward-oriented strategy that promotes incentives that are
neutral between production for the domestic market and export”. In line with neoliberalism, the
main concern of open regionalism is with economic efficiency or, more broadly,
with ensuring economic growth through participation in global wealth creating
activities.
Regional relations are driven by trade and
investment liberalisation, with market forces being the prime movers,
decision-makers and shapers of such regions. Predictably, the main beneficiaries of global market
liberalization (internationally mobile capital, exporters who balk at
restrictive trade policies, local industrialists which are competitive with
overseas producers, and domestic financial capital positioned to gain by
increased access to foreign markets) are often highly supportive of regional
initiatives which take this form.
Open regionalism then,
views regionalism as a means where neoliberal economic policies can be
implemented, and its appeal lies in its ability to allow countries to integrate
more fully into the global economy through the twin processes of trade and
investment. This is in line with the ‘stepping stone’ argument that regionalism
represents an important step on the road to global economic integration. This
process is driven by the private sector and market forces, hence “neoliberal regional integration shifts
emphasis from an imagined historical and political community to a spontaneous,
self-selected and self-interested market-driven community of states and
non-state actors.”
Problems for Market-based Models of Regionalism
“Concerned as it is with purportedly universal laws of development,
neoliberal theory posits that, in principle, the same rules of economic
development can be applied across the board from the most developed to the
least-developed countries. As such, the theory is overly mechanical and
represents a slot-machine approach to regionalism. Taking an individualist
approach, it is silent about deep structural inequalities, especially the
qualitative aspects of underdevelopment lodged in the blockage of highly
inegalitarian social systems. In addition, largely unnoticed is the
contradiction between the openness of neoliberal regionalism and its
anti-regional thrust. In so far as open regionalism strives for a world market
and hooks directly into the global economy, it can skip over regional
integration… What is more, neoliberals’ vision of market relations as a
frictionless world of shared meanings, the uncontested adoption of the ideology
of capitalism, is structurally blind to the patterns of domination and
hegemony.”
Market integration and associated theories of
open regionalism have tended to be the predominant forms of the new
regionalism, during the 1990s, and have dominated the debate in and among major
regional organisations such as MERCUSOR and ASEAN during the 1990s. As a
manifestation of neoliberalism, however, these kinds of models have come under
fire from analysts for their tendency to over-emphasize the potential benefits
of neoliberal market reform without taking into account the often detrimental
effects that rapid liberalisation can produce, especially in developing
countries. The literature on the dangers of implementing market liberalisation
too early suggests that governments should adopt outward-looking strategies
with caution, rather than rushing into them. The tendency of economic
globalisation is to transcend territorial states and hence it is unaccountable
to elected political officials, or rather, is accountable to unelected market
forces. Unlike governments, the market is an impersonal
force which cannot be voted out of power because of the harm it causes and
while market forces certainly hold the potential for significant gains, it
should be remembered that when left to function on their own, they often tend
to widen the economic differences between lesser and more developed areas. While authors tend to differ on the degree to
which the market or the state should be held responsible for the polarising
effects of globalisation, there is general agreement in the post-Washington
Consensus era that a major shortcoming of development policy
in the 1980s and 1990s was its ‘one size fits all’ approach – the idea that all
economies are fundamentally the same, and that a universal set of ‘good’
policies exist for all countries, no matter how big or small.
Another aspect of open
regionalism, which is of particular resonance in light of the mixed record of
structural adjustment policies, has been raised by Maljuf, who points out that
the tendency of open regionalism to encourage North-South agreements is often
motivated by more than the prospect of economic gains. An explicit objective of
developed countries is to lock-in Washington-Consensus-style policies through
legally binding rule-based commitments in the negotiations on a North-South
FTA. Once integration has occurred, it anchors structural reforms which are too
costly to reverse, supposedly encouraging risk-averse investors as to the
permanence of the developing country’s commitment to free-market principles.
While this is generally perceived to be a positive benefit of regional
integration, it should be noted that North-South RTAs also bring the risk of
locking in a single approach to economic development that has proved, in the
case of many developing countries, not always to produce the expected results. Also, these agreements could seriously limit the
policy space available to developing countries to define and implement
development policies in the future.
Furthermore, open
regionalism and economic regionalism theories in general fail to take into
account the importance of political co-operation when it comes to implementing
successful and welfare-enhancing regional integration. To reiterate an earlier
point on the necessary conditions for effective market integration, some form
of political will is necessary before the regional process is started. The main
engines where that process is supposed to be driven are trade, the free market
and the private sector, but if they are unaccompanied by the support of
governments, the regional project is doomed to failure. The
process of integration which open regionalism describes – resting heavily on
the appeal of a regional economy of scale to local and foreign firms – requires
both the maintenance of the rules governing such an arrangement between
constituent countries and the harmonisation of domestic policies in order to
increase the stability and attractiveness of the regional marketplace for
private sector activity.
In other words, regionalism is not a question of setting loose the private
sector and hoping for the best. As Hettne
has pointed out, “the
difference between regionalism and the infinite process of economic integration
is that there is a politically defined limit to the former process.” Thus
it is important to identify actors and motives outside of the economic sphere
that have an interest in regionalisation.
For regional partnerships in the developing world, and especially in
light of this volume, a particularly resonant criticism of open regionalism is
that the problems of disproportionate gains are often ignored. One
characteristic of new regionalism is that many regional organisations tend to
be dominated by one partner, to which the majority of gains in the regional
project accrue. A very real danger of unbridled open regionalism is that
periphery members become subject to increased marginalisation and vulnerability
to political and economic manipulation from the regional hegemon. As the literature on market integration
suggests, some form of redistribution is necessary, but is often very difficult
to decide on. This reinforces the point that explicit political negotiations
and a regional political consensus are a necessary condition for successful
regionalism.
New Regionalisms and ‘Regionalism from
Below’
Critical theories of regionalism arose during the 1990s to account for a
number of perceived shortcomings with existing mainstream theory. Arguably the
defining work of this new approach to regionalism (from here called simply the
‘new regionalism’) was developed during a United Nations University/World
Institute for Development Economics Research (UNU/WIDER) research project under
the leadership of Björn Hettne. At the time, it was
felt that regional theory needed to go beyond the narrow goals of creating
region-based free trade regimes or security alliances, and that regional theory
needed to take cognisance of the contradiction between the dominant logic of
integration by developing countries into a single global market, and the
reality of the difficulties faced by such countries in doing so. The assumption
by those involved in the project was that in dealing with a ‘new regionalism’,
factors other than trade and investment mattered and the end result was an eclectic
and multifaceted approach in which the political ambition of establishing
regional coherence and identity seems to be of primary importance.
The new regionalism de-emphasises the use of free trade blocs and
insists that for regional trade to occur, co-operation, not just competition,
is required. It might seem strange that the word ‘co-operation’ needs to be
highlighted in a new theory of regionalism, but the reality is that dominant
notions of open regionalism have tended to push the need for competition (in
the form of increased trade and investment) while ignoring how this might sit
with the requirement for political co-operation. According to Thompson, it is
this seeming contradiction between the necessity of competition and
co-operation within regional entities that new regionalism attempts to analyse.
With regards to the
relationship between globalism and regionalism, Hettne suggests that the former
should not be merely viewed as a ‘stepping stone’ in a linear process towards
the logic of an integrated global market as suggested by open regionalism. In
some cases, regionalism may be a reaction to the dictates of the global
marketplace which might very well represent a way of halting or reversing the
process of globalization in order to safeguard a degree of territorial control
and diversity of cultures. Regionalism can thus
act as both a counter-process to globalization (a form of deglobalization where
there is an attempt to bring its processes under control) or as a road to
globalism of some sort. Some accounts even
view regionalism as a potential vehicle for a new kind of world order. Amin,
for example, effectively views
it as “a way to renew the perspective of global socialism… Let it just begin to
develop and powerful social forces will rally to it from all regions of the
world.” This, however, is quite a radical view, and
most other authors are somewhat less inclined towards such left-wing views.
Almost all contributors to the new regionalism agree, however, that while
regionalism is not just a ‘stepping stone’ it is not necessarily a ‘stumbling
block either’. Rather, the two processes of globalization and regionalism are
occurring simultaneously, and have deep implications for the future of the
Westphalian state system.
Mainstream market-based theories of integration include more or less
fixed and static definitions of regions and states. In contrast, the new
regionalism questions both the importance of the state and accepted notions of
‘regionness’ and there is nothing to suggest that regions will be unitary,
homogeneous or discrete units. There are no ‘natural’ or ‘given’ regions, but
these are “constructed, deconstructed and reconstructed – intentionally or
non-intentionally – in the process of global transformation, by collective human
action and identity formation.”
Importantly, the new regionalism acknowledges the critical role of civil
society and other actors such as business communities, transnational
associations, environmental and women’s groups and informal networks. The idea
is that cultural and social considerations come into play in regional projects
– for example, a significant pressure for regionalism exists in the form of
cross-border flows such as ethnic group transactions that transcend
international borders, migratory movements and trading on the black market,
which may create new or deepen old senses of regional cultural identity. This means that
regionalism is promoted by both top-down and bottom up processes. As Hettne
notes “the implication is that not only economic but also social and cultural
networks are developing more quickly than the formal political co-operation at
the regional level.” This approach has a greater affinity with
cognitive theories of political dynamics, and paves the way for a dynamic and
voluntaristic view of policy-making with less or little emphasis on
rationalistic assumptions or determinism. Regionalism would thus be explained
not as a result of structural or institutional factors, but on the contrary as
an instrument for changing existing international structures and institutions
to create new identities, opportunities and alliances.
There is also a tendency in the approach to emphasise the weakened
capacity of the state, a consideration of particular salience in Africa where
states have often been powerless and ineffective in supporting local citizens.
This extends the idea about the potential political role of civil society as a
means for the weak and the poor to protect themselves, and the implication
is that any form of regional initiative needs to take such forces into account
when planning for future integration.
D. Mitrany, A
Working Peace System: An argument for the Functional Development of
International Organisations (London: National Peace Council, 1946), p.51.
E. Haas, The Uniting of Europe (London: Stevens, 1958); also see Ernst Haas,
“International Integration: The European and the Universal Process,” International Organization Vol.15, Summer, 1961; Ernst Haas, Beyond
the Nation-State (Stanford: Stanford University Press, 1964); Ernst Haas,
“Technocracy, Pluralism, and the New Europe,” in Joseph Nye, ed., International
Regionalism (Boston: Little, Brown, 1968); Leon Lindberg, The Political Dynamics of European
Integration (Stanford:
Stanford University Press, 1963); Ernst Haas and Philippe Schmitter,
“Economic and Differential Patterns of Political Integration: Projections about
Unity in Latin America,” International Organization, Vol.18, Autumn, 1964.
L. Fawcett and A. Hurrell, eds., Regionalism
in World Politics. Regional Organization and International Order (Oxford:
Oxford University Press, 1995), p.59 as cited in Söderbaum, (2005), p.6.
S. Breslin and R. Higgot, “New regionalism(s) in the
Global Political Economy: Conceptual understanding in historical perspective,” Asia
Europe Journal, Vol.1, 2003,
pp.168-169.
E. Haas, The Obsolescence of Regional Integration Theory (Berkeley: University of
California Press, 1975) as quoted in Rodrigo
Tavares, “The State of the Art of Regionalism: The Past, Present and Future of
a Discipline,” UNU-CRIS e-Working Papers W-2004/10, 2004, p.9.
W. Mattli, “Explaining Regional Integration Outcomes,” Journal
of European Public Policy, Vol.
6:1, March 1999, p.5.
Some
authors, most notably, Jagdish Bhagwati, have identified this change as the
major factor in the revival of regionalism. The reasons for the US policy
change have been analyzed in depth in Bhagwati’s chapter in Jaime de Melo and
Arvind Panagariya, eds., New Dimensions in Regional Integration (Cambridge:
Cambridge University Press, 1993) and
Walter Andrew Wyatt, “Regionalism, Globalization and World Economic Order,” in Louise Fawcett and Andrew
Hurrell, eds., Regionalism in World Politics: Regional Organization and
International Order (Oxford: Oxford University Press, 1995). Others have argued that US policy was,
and still is, primarily centered on the promotion of multilateralism, and hold
up US support for the WTO and its repeated insistence that multilateral
negotiations should form the cornerstone of efforts to lower global trade
barriers as evidence.
J. Viner, The Customs Union Issue
(Washington, DC: Carnegie Endowment
for International Peace, 1950).
W. Mattli, “Explaining Regional
Integration Outcomes,” Journal of European Public Policy, Vol. 6:1, March 1999, p.31-32. See also Margaret Lee, The Political Economy of Regionalism in
Southern Africa (Cape Town: University of Cape Town Press, 2003), p.20 and Bertil Oden,
“Regionalisation in Southern Africa,” World Development Studies 10 (Geneva:
UNU/WIDER Project, 1996), p.6.
B. Balassa, The
Theory of Economic Integration (London: Allen & Unwin, 1962),
pp.112-147. See also Shaun Breslin, et al, eds., New Regionalisms in the Political Economy,
p.13, and Frederick
Söderbaum, “Rethinking the New Regionalism,” p.8.
See the recently released World Bank report “Meeting the Challenge
of Africa’s Development,” World Bank, September 7th 2005. As
the report notes, however, “the international experience with Regional Trade Agreements is much
richer than this simple taxonomy suggests. NAFTA and other more recent agreements
establishing free trade areas contain provisions governing domestic labour
standards and other regulatory issues, which one traditionally associated with
agreements for deeper integration. On the other hand, many free trade
agreements exclude important categories of goods (notably agriculture) from
trade liberalization. In some cases customs unions still levy tariffs on trade
between members.”
C. Clapham,
“Regional Integration in Africa: Lessons and Experiences,” pp.17-29.
The problem of ‘creeping expropriation’ (where the host country
establishes laws and regulations that deprive investors of the value of their
contract) has been identified as a major disincentive to investment in
developing countries. Such measures include local equity obligations, profit
remittance controls, forced sales, export performance requirements, forced
partnerships, local content requirements, licensing restrictions, financing
restrictions, restricted markets, tax discrimination, export quotas,
supervision of transfer prices, and the prevention of local acquisition. See
Charles Lipson, Standing Guard: Protecting Foreign Capital in the Nineteenth
and Twentieth Centuries (Berkeley: University of California Press, 1985),
pp.162-182, Michael Duerr, The Problems Facing International Management (New
York: Conference Board, 1974), p.5, Stephen Kobrin, “Foreign Enterprise and
Forced Divestment in LDCs,” International Organization, Vol.34, 1980, pp.65–88. Note that not
all investment is equally vulnerable to government-level opportunism.
This is a problem for traditional regional integration
theory which has been raised by Dieter and Higgot. As they point out,
Balassa’s traditional five step approach was first articulated in the 1960s,
when tariffs, as barriers to trade, were much more important than they are
forty years later. No link was provided for management of monetary policy and
financial flows in the first three levels of integration, a glaring shortcoming
in today’s era of highly mobile capital and global financial markets. Some
efforts have been made to address what they see as a “major theoretical and policy
deficiency.” See H.Dieter R. Higgott, “Exploring alternative theories of economic regionalism: From
trade to finance in Asian co-operation?” Review of International
Political Economy, Vol.10, No.3, August 2003, pp.430–454.
P. Mistry, “The New Regionalism: Impediment or Spur to Future Multilateralism?”
in Bjorn Hettne et al, eds., Globalism
and The New Regionalism, p.123.
H. Nesadurai, Globalisation, Domestic Politics and Regionalism: The ASEAN
Free Trade Area (London: Routledge, 2003), p.237.
J. Haarløv, Regional Co-operation and Integration within Industry and Trade in
Southern Africa (Aldershot: Ashbury, 1997), p.30.
See for example,
Joseph Stiglitz, Globalization
and Its Discontents, and Ricardo French-Davis, “Reforming the Reforms of the
Washington Consensus: For Achieving Growth and Equity,” (CSIS, June 23rd
2003).
N. Phillips, “The rise and fall of open regionalism: Comparative
reflections on regional governance in the Southern Cone of Latin America,” Third
World Quarterly, Vol. 24, No.2, 2003, pp.217–234.
See, in addition to Hettne et al, Globalism
and the New Regionalism:
Björn
Hettne, Andras Inotai and Osvaldo Sunkel, eds., National Perspectives on the
New Regionalism in the North (Basingstoke: Macmillan, 2000a);
Björn
Hettne, Andras Inotai and Osvaldo Sunkel, eds., National Perspectives on the
New Regionalism in the South (Basingstoke: Macmillan, 2000b);
Björn
Hettne, Andras Inotai and Osvaldo Sunkel, eds., The New Regionalism and the
Future of Security and Development (Basingstoke: Macmillan, 2000c) and
Björn
Hettne, Andras Inotai and Osvaldo Sunkel, eds., Comparing Regionalisms:
Implications for Global Development (Basingstoke: Palgrave, 2001).
