Regional Integration Agreements Research Articles

Perspectives on Engagement of Non-State-Actors in Regional Integration in SADC Region’s AfCFTA Context

The role of Non-State Actors (NSAs) in the SADC regional integration was approved by the Council of Ministers in 2022. The Council gave the NSAs the mandate to participate in the regional integration agenda and contribute into SADC policy development, roll out, monitoring and evaluation. Ironically, there are no clear systematic mechanisms providing for NSAs’ engagement within the SADC structures and processes despite existence of SADC institutions. The coming in of the AfCFTA agreement sought to create a single African market thereby creating opportunities for NSAs. To date no noticeable increase in Africa intra-trade has been recorded. The study therefore, examines the perspectives on engagement of Non-State-Actors in the context of Regional Integration focusing on SADC region. The findings show that state actors are not involving non-state actors as they discuss regional economic integration agreements. The researcher recommends that valuable additions to regional economic integration and strengthening should be premised on an environment where policies and regulations are formulated from a consultative and inclusivity of NSAs. It is concluded that, when NSAs explore regional markets or create regional value chains, they facilitate regional economic integration from the bottom-up approach through their activities.

REGIONALISM AND AFRICA'S FUTURE: THE IMPERATIVE OF UNITY

Africa has no choice but to integrate into the global economic and financial systems to grow sustainably and reduce extreme poverty. The challenges faced by a continent with numerous tiny national markets and landlocked states are seen as rational reasons for regional integration. As a result, African countries have signed numerous regional integration agreements, many overlapping significantly with their members. However, African regionalism has not made significant progress, and African disunity is one of its greatest challenges. Since the inception of Pan-Africanism, much has been said about African unity. Various scholars explain that PanAfricanism is a movement, an ideology, and a geopolitical project that liberates and unites African people and the African diaspora worldwide. Kwame Nkrumah and Julius Nyerere are two of the most famous ideologues of African unity. They shared the desire and ideal that the strength of Africa would come from a 'United States of Africa'. At the Ghana Conference in 1960, Nkrumah said that Africa could and must be united, but it was not easy, and came up against numerous obstacles. Therefore, all the concerned bodies on the continent need to sit down and plan for the future, knowing that the only way out of the crisis lies in realizing true African unity. This paper examined the impact of African unity on the effectiveness of regionalism and a better future for the continent.

Regionalization of Latin America based on asymmetries in the absorptive capacity of countries

Latin America has a rich history of regional integration agreements with no sustained success. One possible explanation is that these agreements mainly depend on political considerations and do not have a solid basis at the level of private agents. Opposite to the previous literature on regionalism, a method founded on asymmetric economies is proposed in this work. Based on the identification of sources and manifestations of asymmetries, a club clustering proposal of countries is provided. The study involves 67 variables, 20 countries from Latin America, and a period between 1985 and 2008. The results reveal that the existing agreements are not based on the countries' asymmetries, then, the achievement of a successful continental integration is unlikely under the current circumstances.

A comparative analysis of regional integration potential in the Asia-Pacific Region

Objective: The objective of the article is to verify whether the EU can be perceived as a benchmark for further integration of Regional Comprehensive Economic Partnership Participating Countries (RCEP PC) of the Asia-Pacific region. Research Design & Methods: We adopted a quantitative research methodology. It employed cluster analysis through Ward’s minimum-variance method to analyze the Euclidean distances of eight GDP-based World Development Indicators and build two synthetic development measures: SMDRCEP and SMDEU. They were used to group countries according to their level of economic advancement. Standard deviation was used to measure the differences in the structure of GDP in both environments (σRCEP and σEU). The research sample was composed of all RCEP PC and European Union Member States (EU MS). The data sets came from the World Bank database. Findings: The integrity level of RCEP PC is lower than that of EU MS; however, the differences are less significant than expected. Nevertheless, the possibility of RCEP reaching the next integration levels in the foreseeable future is limited. Implications & Recommendations: As RCEP PC do not seem to be able to engage in further integration in the near future, RCEP PC policymakers and business entities should focus on keeping the agreement alive in its current form (FTA). We recommend analyzing whether integration in smaller and more homogeneous groups of countries is possible and desirable. Another factor worth further research is whether the inadequate size of the Chinese economy within the agreement has a pro- or anti-integrational influence on RCEP. Contribution & Value Added: Our research provides an actual insight into the development possibilities of the ‘youngest’ regional integration agreement, the RCEP, based on the experiences related to the integration of the most advanced regional integration agreement, the EU.

How regional integration agreements can foster inclusive growth: lessons from exporting SMEs in the Western Balkans

Empirical evidence on regional integration indicates that CEFTA?s Common Regional Market (CRM) could have spatially unequalising effects across the Western Balkans. Such an outcome would be in conflict with CEFTA?s goal of inclusive regional economic integration. This article offers a roadmap to avoid that pitfall. Literature on the changing global economy in the digital era and ICT-led growth and literature on the political economy of trust and cooperation between smaller economic agents are brought into a conversation with bottom-up empirical insights from small and medium enterprises (SME) from the region. Empirical data are collected from in-depth interviews with 58 export-oriented SMEs in Bosnia & Herzegovina and Serbia. I find that smaller firms are immensely interdependent with the environments within which they operate and that their competitiveness also stems from their ability to successfully leverage on these communal resources and local public goods. Finding ways to preserve and enhance this collective infrastructure is often more of a priority for them than market expansion and technological progress. The paper concludes by arguing that designing (supranational) institutions which can facilitate local and translocal cooperation among competitive exporting SMEs would mobilise greater democratic support for the CRM project.

FOREIGN DIRECT INVESTMENTS INTO EASTERN AFRICA REGION: THE INFRASTRUCTURE DEVELOPMENT NEXUS

Infrastructure development is an essential element in economic growth and development. Good infrastructure fosters low transaction costs hence making production efficient and attracting foreign direct investments. However, there has not been adequate scholarly focus on how infrastructure development can affect the flow of foreign direct investments hence this paper sought to fill this gap. This paper utilized panel data from 12 eastern Africa countries from 2004 through 2017. Data on Infrastructure development variables was obtained from the Africa Development Bank’s, Africa Infrastructure Development Index, that of control variables from the World Development Indicators kept by the World Bank and that of Foreign direct investments from UNCTAD. Due to the presence of heteroscedasticity in sample data, the study opted for a Generalized Least Squares (GLS) estimation method. The study established a significant relationship between infrastructure development and foreign direct investment inflows into the eastern Africa region. However, only Africa Infrastructure Index and Electricity Composite Index were positive while Transport Composite Index, ICT Composite Index and Water Supply and Sanitation Index were negative. Reasons being, Transport, ICT, water and sanitation are considered as social development factors. One of the control variables, total tax and contribution rate was negative indicating a unit increase in tax leads to a decrease in foreign direct investments whereas market size was positive and significant. The study recommends to policy makers to allocate resources into infrastructure development as an enabler of production efficiency, appraise the tax system to ensure a balance is stroked between taxing of investment returns and generating adequate tax revenue from multinationals and enhance its markets through multilateral and preferential trade agreements and regional integration agreements.

AfCFTA and Regional Integration in Africa: Is African Union Government a Dream Deferred or Denied?

ABSTRACTThe concept of regional integration is not a new phenomenon; it has been raging since the 1960s when many African countries gained political independence from their erstwhile colonial masters. In essence, there were two blocs which had different views on how to integrate Africa, and the pace and veracity through which this was to be done. The first bloc was the Casablanca bloc under the leadership of Dr Kwame Nkrumah, the second was the Monrovia bloc which was led by Nnamdi Azikiwe, the first President of Nigeria. The former argued for a wholesale and once-off comprehensive political and economic unification of Africa, from Cape to Cairo, the Horn of Africa to the West of Africa. The latter insisted that Nkrumah’s approach was not feasible; therefore, a gradualist and more cautious approach was necessary, first by forming regional economic communities, then later an African Economic Community, with a politically integrated Africa emerging as the last step. The Monrovia bloc won the debate. The central argument of this paper is that almost all of these regional integration efforts and agreements (from the Lagos Plan of Action 1980, the Abuja Treaty 1991, the Tripartite Free Trade Area (TFTA) 2015, the African Continental Free Trade Area (AfCFTA) 2018, and the eight official Regional Economic Communities (RECs) in Africa, etc.) disproportionately focused on trade and economic integration while saying very little about the crucial integration aspect concerning the political unification of Africa in the form of a centralised union government.

MERCOSUR common market building:

My paper addresses the following questions: can MERCOSUR achieve the goal of creating a common market that implies free movement without resorting to governance instruments that require supranational institutions? Can the Mutual Recognition (MR) instrument resolve the problem of divergent standards? Further, in the case of MERCOSUR, can it really be considered a non-supranational governance instrument? In the next sections, I define a common market under a Regional Integration Agreement (RIA), I then address the relationship between standards, technical barriers, and the integration of goods markets, especially in view of the potential trade-off between liberalization and heterogeneity. Finally, I consider the possibility of building a MERCOSUR common market without supranational institutions.

A Tale of (almost) 1001 Coefficients: The Deep and Heterogeneous Effects of the EU‐Turkey Customs Union

AbstractIn view of the deferred start of negotiations for the modernization of the customs union between the EU and Turkey (CU‐EUT), we looked back and analysed the ex post trade consequences of the CU‐EUT. Employing up‐to‐date econometric best practices for regional integration agreements, we quantified both the total and the heterogeneous trade effects of the CU‐EUT. In contrast with most previous studies, our results indicate that the CU‐EUT made a significantly positive, large and robust impact, implying there was an additional increase in EU‐Turkey trade in manufacturing by 55–65 per cent compared with that during the previously active Ankara Agreement. We also provide evidence that the CU‐EUT significantly increased Turkey's trade with non‐member countries of the CU‐EUT. Additionally, a substantial heterogeneity in the CU‐EUT effect was found across different industries as well as for each of its member countries and the direction of trade. We linked the heterogeneity of up to 911 coefficient estimates to the differences in initial trade costs and show that it cannot be ascribed to reductions in bilateral tariff rates.

Trade and Economic Growth: Theories and Evidence from the Southern African Development Community

This paper empirically tests the hypothesis that trade can act as an engine of growth using panel data for the Southern African Development Community (SADC), a regional integration agreement (RIA) organization, the central objective of whose formation was the need to accelerate, foster, and encourage the region’s growth. Our results indicate that during the period covered by this study (2005-2017), export expansion stimulated growth, more openness to trade reduced it, and that the formation of SADC had not yet brought about any effects on growth perhaps because of lack of full establishment of the primary instruments for achieving its central objective. These results lead to three conclusions. Firstly, trade through export expansion seems to be a better solution for SADC for achieving the central objective of its formation. Secondly, more openness to trade seems to jeopardize growth. Finally, the formation of SADC has not yet brought about the expected gains from a RIA. In this context, we recommend that policymakers should consider adopting measures aimed at supporting increased trade through promoting export expansion, achieving strong absorption of negative chocks that usually result from trade, and exploring the possibility of establishing all the planned primary instruments for achieving SADC’s central objective.

Higher Education Regionalization in South America

Regional integration agreements have oriented toward common educational exchanges within the region. In previous research, Jane Knight’s functional, organizational, and political approaches model (FOPA) has been proven to capture a large spectrum of the main aspects relevant to the study of the regionalization of higher education. Knight’s threefold framework allows for an analysis of the role of different actors, institutions, programs, systems, networks, and agreements in those challenges. However, this model has only been applied to the study of African and Asian regions, while the regionalization of higher education in South America has remained understudied. The advent of the Educational Mercosur (SEM — Sector Educativo del Mercosul) in 2006 and other affords from ALBA-TCP, UNASUR, Pacific Alliance, and CAN present an opportunity to test the FOPA framework in South America. This paper analyzes the meaning, concepts, and processes occurring in the regionalization of South American higher education. The result is a “panoramic screenshot” covering educational initiatives that promote regionalization in the region. The higher education agenda is visibly present in the scope of the South American regionalism. In conclusion, the paper identifies key questions for future research.

Is a more financially open world riskier?

The paper studies co-movement and causality between global financial openness and nearly all known types of financial crises during 1970–2014. It builds on a composite measure of global financial openness, which synthesizes three well-established indicators (de-jure, de-facto capital account openness and the KOF economic globalization index). I use linear and nonparametric Granger (no) causality tests as well as wavelet-based techniques to characterize the dynamic dependence, which appears rather weak. Only in case of systemic and triple crises, this dependence is found more robust. I offer two explanations for the elusive openness-crisis nexus. First, the impact of global financial openness on the frequency of crises can be indirect, transmitted through global macro-fundamentals (world real GDP growth rates, global inflation and commodity prices). Second, capital account liberalization can be self-reinforcing. Despite an increased risk of crises, countries, which have partly implemented such reforms, are likely to proceed. In doing so, they are often guided by their peers in a regional integration agreement. Overall, the findings of the paper question the widespread assertion that increasing global financial openness undermines financial stability.

Electronic Trade in the World Trade Organization - Difficulties in Negotiating an Agreement?

The aim of the study is to present the premises that make it difficult to reach a multilateral agreement on electronic commerce in the World Trade Organization. Electronic commerce at the end of the second decade of the 21st century is an inseparable element of international trade, as a result of the digital revolution leading to lower costs when companies enter the global market. They often take into account the digital revolution of the state when creating new business models, especially in China, which has obtained the world's leading position in the field of digital services export. Increasing competition in the field of digital services, in the absence of regulations on electronic commerce in the WTO, will increase the interest of developed countries, including Australia, the United States, the European Union, Japan, African countries to solve the subject of e-commerce in regional integration agreements. The problems with reaching an agreement on electronic commerce in the WTO result not only from the specificity of trade in electronic form but from the general strategy of trade liberalization in other sectors. Classification-JEL: Keywords: International trade; electronic trade; e-commerce; World Trade Organization; digital economy

Autocracies and regional integration: the Eurasian case

The establishment of the Customs Union of Russia, Belarus and Kazakhstan in 2010, succeeded by the Eurasian Economic Union in 2015, constituted an important discontinuity in the development of post-Soviet regionalism: while the preceding organisations remained cases of ‘ink-on-paper’ regional integration, in the case of the Customs Union the members actually implemented their commitments. This creates an important theoretical challenge: the literature (which the previous experience of Eurasian regionalism was very much in line with) conjectures that authoritarian states are unable to successfully implement an economic regional integration agreement (RIA). The aim of the article is to explore the conditions under which implementation of economic RIAs by autocracies happens. We argue that the implementation is influenced by the extent of economic, social and political ties between member states, and suggest that, unlike democratic states, which are more likely to implement a RIA where there are strong economic ties, non-democracies are more likely to do so in the case of intermediate economic dependence.

Comment on “Is Abe's Fiscal Policy Ricardian? What Does the Fiscal Theory of Prices Mean for Japan?”

Comment on “Is Abe's Fiscal Policy Ricardian? What Does the Fiscal Theory of Prices Mean for Japan?”

International production networks and the world trade structure

In this work, we examine bilateral trade data in two industries with different technological characteristics (textiles and apparel, and electronics) in order to detect the presence of international production networks in these sectors and to assess their structures and organization. Moving from the recent stream of literature that underlines the importance of assessing the participation and position of a country within an international production system, generally much more complex than a simple chain, we examine if these networks can be identified using traditional trade data and if they are still mainly regional.We start by applying a particular specification of bilateral trade intensity indices to the matrix of world trade in each sector (from the BACI – CEPII database), using the BEC classification to distinguish between intermediate and final goods, in order to highlight trade flows driven by international production networks. We compute indicators for the world trade matrix and its regional partitions, as defined by exogenous geographical criteria, or by the existence of regional integration agreements. The resulting pattern of revealed trade preferences conveys useful information about the actual geographic distribution of the underlying international value chains.The core of the paper is an application of network analysis to better understand the topology of global and regional value chains. In each industry, we identify endogenous geographical sub-networks based on preferential trade links, again distinguishing between trade flows in intermediate or final goods, and we examine the topological structure of the trading regions, to assess whether they are similar across industries and goods’ categories, and if they are built around a central core country.On the basis of both approaches, we conclude that trade regionalization is still high, especially in electronics, confirming that geographical proximity and other integration factors still play a role in facilitating international production and trade. However, regionalization has slightly declined in the recent past, and there are some relevant preferential linkages bridging different regions.In addition, the topology of trade networks can indeed shed some light on the structure of the underlying production linkages. In particular, a stronger preferentiality and selection of partners seem to occur for trade in intermediate goods, as suggested by the theory of international fragmentation of production.

Specialization and Exports in South America after Trade Agreements

A vast body of literature recognizes that economic integration brings asymmetric benefits for the actors carrying out the process. Regional integration agreements influence the level of industrial activity and its location, preventing some countries from fully participating as beneficiaries. This study aims to examine the changes in production and export structures of South American manufacturing sector after the signing of trade agreements. We performed unit root tests with endogenous breaks, cointegration tests, and stochastic frontier models on production and export for the period 1985~2008. Our results show that after the signing of trade agreements, changes in the structure of production and export have been weak, and thus trade agreements have not boosted structural changes in specialization and export intensity in South American countries.

Effects of the Euro-Mediterranean Partnership on Tunisian FDI Inflows

ABSTRACTThis article focuses on the effect of regional integration agreements (RIA) on foreign direct investment (FDI) inflows to developing countries, particularly on the Euro-Mediterranean Agreement signed by the Tunisian government in 1995. The econometric study is based on an extended gravity model treated with the Heckman technique to account for censorship of the explained variable. The main findings are that traditional economic determinants are still the main motivation for foreign investors to invest in Tunisia and that the regional integration process had no effect on this choice.

The Political Economy of Regional Integration

This article reviews and analyzes recent research on regional integration. The review is structured along a political economy framework and proceeds in three steps. After analyzing the development of regional integration agreements (RIAs) from a historical perspective, I first discuss regional integration as a consequence of the decision-making calculus of office-motivated political leaders who find themselves under pressure from different societal groups interested in promoting or hindering regional integration. These pressures are conveyed, constrained, and calibrated by domestic institutions, which provide an important context for policy making, and in particular for the choice to enter RIAs. The analysis also highlights the importance of international pressures for regional integration. Second, I summarize the determinants and consequences of variations in regional institutional design. Third, I analyze the normative and strategic consequences of regional integration. The article concludes by outlining opportunities for future research, with emphasis on the domestic politics of regional integration, the causes and consequences of institutional design beyond trade agreements, and the consequences of the increasing number of often overlapping regional agreements.

Market Building through Regional Integration Agreements : The EU and the ASEAN Way

We define the internal market of a regional integration agreement as a legal order that is based on the rule of law. A regional integration agreement is a particular case of market building in that it creates a new market with new rules. The ability to change the participating institutions is essential. A key issue consists in verifying that a constitutional change is possible as well as adapting the local institutions to the new constitution. In comparing the case of the European Union and the Association of Southeast Asian Nations, we rely on the assumption that a shared goal can be achieved with different solutions that consider the starting point of participating states. In terms of the Association of Southeast Asian Nations, we consider the possible absence of centralized powers.