Regional Integration Arrangements Research Articles

Trends in Regional Economic Integration in the SADC and Global South: A Mixed-Method Approach

Economic integration through trade liberalisation constitutes a central objective of regional integration arrangements (RIAs) in the Global South. This seeks to foster increased economic interdependence and stimulate trade between member countries. In the Southern African Development Community (SADC), economic integration is a pillar of regional economic development, with reference to industrialisation and long-term socio-economic growth and development. Regional development policy, such as the Protocol on Trade, emphasises increased trade liberalisation to unlock the growth potential inherent to regional value chains. While a linear regional integration process, consisting of the eventual creation of an economic and monetary union, is envisioned in the SADC, the implementation of measures to further economic integration has stalled. The creation of a free trade area (FTA), earmarked for 2008, has failed, with preferential trade agreements in place. This paper aims to investigate trends in economic integration in the SADC and other developing country RIAs. Objectives include determining the extent to which trade liberalising policies have stimulated intra-regional trade growth and delineating recommendations to foster this outcome further. A mixed-method approach is utilised, which includes a qualitative case study analysis of economic integration policies in nine RIAs in the Global South and a quantitative analysis of the intra-regional merchandise trade growth (as a portion of total merchandise trade) per RIA in the sample (1995-2020). The findings indicate that while most of the RIAs have developed policies to support economic integration, there is divergence in current levels and growth of intra-regional trade. Two RIAs, including the SADC, have experienced more than 5% growth in this variable, while four experienced lower growth. Intra-regional trade declined in three RIAs. Applicable interventions include capacitating regional institutions to support relevant policy formulation and implementation, in addition to improving both physical and non-physical regional infrastructure to foster trade growth.

African’s Information and Communications Technology (ICT), Innovations and Economic Growth- Towards region integration: Empirical Evidence of Dynamic GMM Panel Data Approach.

Current literature on economic growth and development uniformly affirms the consensus that Information and Communication Technology ICTs (here defined as the composite index using 11 indicators as developed by (ITU)) is indispensable for economic growth and enhancing a wide range of development indices. It is common knowledge today that Information and Communication Technology (ICT) -whether embodied in human skills, capital goods, practices and organizations—are the key drivers of economic growth and sustainable development of nations and regions. The integration, growth and competitiveness of the economies of the East African Community (EAC) depend on Information and Communication Technology (ICT) and innovation.
 This paper examines the impact of Information and Communication Technology (ICT) use on economic growth using the Generalized Method of Moments (GMM) estimator within the framework of a dynamic panel data approach and applies it to five East Africa community Countries (EAC) countries over the period 2000 to 2018.The results indicate that there is a positive relationship between real GDP Growth and ICT Development index (as a composite index measured by the number of indicators which are, ICT readiness reflecting the level of network infrastructure and access to ICTs, ICT intensity reflecting the level of use of ICT in the society and ICT (skills) impact reflecting the result/outcome of efficient and effective ICT user). This implies that if these countries seek to enhance their economic growth, they need to implement specific policies that facilitate ICT development.
 The five Partner countries of the EAC should make closer cooperation strategies, systematic and significant regional integration arrangements in the generate and application of new knowledge and technological innovations, their ambitions to grow their economies, achieve Millennium Development Goals (MDGs) targets, deepen economic and political integration and attain sustainable development.

Free trade agreements partnership and value chain linkages: Evidence from China

AbstractAs multilateral trade negotiations have lapsed into stalemate, regional economic integration arrangements like free trade agreements (FTAs) are gaining growing prominence. We propose a theory on how a developing country's GVC linkages with partners are affected by partners’ position on the GVCs and the characteristics of the FTAs, and use a large matched data of China's trading partners to validate our hypothesis. We find that there are stronger value chain linkages between China and higher‐income economies, and the degree of mutual value chain dependence rises in line with the partner's development level. The GVC promoting effect of FTA partnership is more pronounced for China's value chain linkages with its higher‐income partners. The results survive various robustness checks and are likely to be informative for other developing countries.

Adding numbers to complex processes: Asian integration indicator systems in perspective

Even if Asia shows a relatively low density of regional integration arrangements, the continent has been relatively active in designing indicator systems to monitor the ongoing integration processes. Organisations such as the Association of Southeast Asian Nations, Asian Development Bank, Eurasian Development Bank, United Nations Economic and Social Commission for Asia and the Pacific, and United Nations Economic and Social Commission for Western Asia have been involved in such activities. The purpose of this short article is to review the indicator systems that are currently being developed or have recently been developed, to monitor and analyse regional integration processes in Asia. These systems are cast against the background of experiences with building indicators and indicator systems globally.A subset of indicator systems receives a closer look. The assessment covers: (i) general scope and purpose of the indicator system, (ii) specific scope (policy areas covered), (iii) indicator selection, and (iv) weighting and aggregation. Lessons are drawn from these experiences to inform future monitoring efforts in Asia and beyond.

“ИНТЕГРАЦИЯ ИНТЕГРАЦИЙ” И ПЕРСПЕКТИВЫ БРИКС+

During 2017 BRICS Summit the Chinese government announced the idea to promote the “BRICS Plus” cooperation approach, encouraging closer partnership among the group of emerging markets and developing countries. The idea was fixed in the final declaration, but the mechanism of its implementation remains uncertain, as well as the list of participants. The paper aims at reflecting Russian approach to the implementation of the “BRICS Plus” concept and exploring direction of potential cooperation among the countries of the expanded format. The key idea underlying our projections is that all the BRICS countries are leading economies within one of the regional integration arrangements on their continents, so the member countries of these five integration blocks may form the ‘BRICS Plus circle’ for flexible and multi-dimensional cooperation. The implementation of the “BRICS+” idea may push interaction within a group of developing countries for strengthening stability and enhancing their role in the world economy. The new expanded format of “BRICS Plus” can serve as a platform for linking regional integration associations in two ways: (1) expansion of trade cooperation at the trans-regional level, gradual harmonization of foreign trade policies within five integration associations and (2) gradual shift of trans-regional agenda from trade cooperation to a wider range of areas. The author stresses, that in trade cooperation particular attention must be paid to the harmonization of technical regulations, as well as sanitary and phyto-sanitary standards. Besides, the expanded format of “BRICS Plus” may provide a network of bilateral currency swap agreements aimed at reducing dollar payments and stimulating settlements in national currencies. The system of currency swap agreements can be supplemented by the networks of interbank local currency credit lines agreements and harmonization of banking rules and procedures. The author concludes, that according to contemporary priorities of the developing countries and regional agendas of the five integration blocks the new directions of trans-regional cooperation may include (1) harmonization of e-commerce policies and creation of a common e-commerce information space (trans-regional e-Commerce platform) (2) inter-state cooperation in the interests of small and medium enterprises (3) creation of a consolidated technological platform at “BRICS Plus” level.

Extending BRICS to BRICS+: the potential for development finance, connectivity and financial stability

ABSTRACTThe heterogeneity of the BRICS impedes rapid progress. One way to overcome this limitation would be to shift the focus from trade liberalization to other types of economic cooperation. This can be complemented by accepting China’s initiative to create a BRICS+ structure, which would augment the cooperation among the core five members by a wider circle generated by each of its members within their respective regional integration arrangements. We conceive of it as a ‘circle-and-spoke’ model. We argue that three areas of cooperation are feasible and promising: development finance, connectivity and financial stability. Institutionally, this means cooperation among regional integration organizations, regional development banks and regional financing arrangements.

The “Absence” of Asian Regional Economic Integration and the Development Orientation of the Belt and Road

Asia has a special significance in China’s neighborhood strategy. Geographically, the Belt and Road Initiative faces the countries of Asia or China’s neighbors in the first place. Asia is clearly marked by an imbalance in and “absence” of regional economic integration. This “absence” is two-fold: it is expressed on the one hand as a lack of unified institutional arrangements for regional economic integration, and on the other as the inability of underdeveloped countries in the region to truly participate in regional economic integration and thereby gain opportunities for development. Compared with the rule-oriented nature of existing regional economic integration mechanisms, the Belt and Road Initiative, as a new type of regional cooperation mechanism, displays an orientation towards development. All existing regional economic integration arrangements, regardless of their form, establish specific rules on access thresholds, the rights and duties of member countries, schedules and roadmaps, dispute resolution mechanisms and so forth. This is not the case for the Belt and Road, which is not predicated on specific rules, but establishes its overall framework by orienting itself towards development. Overall, the development orientation of the Belt and Road is helpful not only in overcoming the inherent defects of Asian regional economic integration, but in responding to the new challenge of anti-globalization. This is an institutional public good that China offers to Asia and to the world.

English

It has been observed that the pressures of globalisation and the lure for increased profitability have continued to motivate South African multinational companies (MNCs) to invest across international borders, especially in the Southern African Development Community (SADC). Furthermore, the deliberate policy to integrate the region has necessitated most of the governments of the SADC to encourage their largest companies to invest within the region, in order to tap from improved incentives created by the regional economic integration arrangement. Using both aggregate and firm level dataset from various sources between the period 1980 and 2011 in various econometric estimations, this study uncovers that there is correlation between the value of South African MNCs’ contribution to regional economic development and investment in the SADC. The main results from this study show that South African MNCs contributes positively to regional economic development and investment in the region. Similarly, the findings of this study indicate that South Africa-originated MNCs operation within the region triggers the growth of the cumulative GDP of this region. The causality test affirmed the statistical significance of these relationships, and also ensured that spurious correlations did not impede the econometric estimation procedure. Key words: Multinational corporations, South Africa Development Community (SADC), foreign direct investment, macroeconomic dynamics, regional trade agreements, regional economic integration.

Rethinking regional economic integration in Africa as if industrialization mattered

This paper outlines an evolutionary and an historical theoretical framework to identify and propose taxonomic principles that can be used to analyze whether or not a given regional economic integration (REI) arrangement is transformative and developmental. Using this framework, it looks into the relationship between industrialization and regional economic integration in Sub-Saharan Africa (SSA). It also looks at how asymmetric economic integration with advanced economies has affected industrialization and symmetric economic integration in Africa. Based on historical evidence, the paper concludes that there is a positive, circular and cumulative relationship between industrialization and regional economic integration in SSA. It also concludes that the asymmetric economic integration of SSA economies with advanced ones has had negative, circular and cumulative impact on industrialization and (symmetric) economic integration in SSA. Therefore, it argues that, if industrialization and transformative REI is to take place in SSA, there is a need for making context-specific, dynamic and transformative industrial policies as center pieces of development strategies, for rethinking REI initiatives in such a way that they facilitate and amplify the effectiveness of these industrial policies and strategies, and for replacing the legacies of colonialism and neoliberal globalization with strategic integration of SSA economies vis. advanced economies.

From an Eroding Model to Questioned Trade Relationships: The European Union and Sub-Saharan Africa

The article analyses two key questions: the European Union (EU) as a model of regional integration for developing countries (including sub-Saharan Africa) and the EU as a trade partner. It argues that these two dimensions have been questioned since the mid-2000s and that this questioning stems from common interrogations on the credibility and the efficiency of the EU’s policy choices. The first step of the argument is that while the EU has represented a paradigmatic model of ‘developmental’ regional integration arrangements, the EU’s adherence to specific theoretical assumptions has eroded the credibility of its model (competition, fiscal discipline) as an optimal tool of growth and welfare. The second step of the argument is that these assumptions have influenced the theoretical framework and trade policies devised for developing countries, notably the Economic Partnership Agreements, which appear to be inefficient as tools for these countries’ growth. This theoretical framework has not only weakened the credibility of the EU as a model of a developmental regional integration, but also weakened the economic efficiency of its trade policies and, in turn, the credibility for sub-Saharan African countries of the assertion by the EU that its trade policies could be a tool of development.

Prospects and Challenges of Intraregional Trade and Investment among India and BIMSTEC

The globalisation wave gave rise to a number of regional arrangements. The thought of economic regionalism expanded the prominence in international trade as well as regional diplomacy. In present world, no nations survive into economic isolation. So, Trade liberalisation alone is notadequate condition for nations to turn either single or multiple “Regional Integration Arrangements” (RIA). Within such arrangements. Desire is to assist neighbouring states for mutually beneficial purposes, as well as to take anticipatory action against the spill over of unrest and mass economic migration. The fascinating logic of regional groupings in Asia, coupled with the obvious failure of SAARC and the near incapacitating East Asian crisis of 1997, jointly contributed to the creation of BIMSTEC. The BIMSTEC (Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation) grouping, brainchild of Thailand, is a unique initiative in sub regional economic cooperation. It has the distinction of combining five geographically contiguous countries of SAARC with two of ASEAN, thus creating a vast scope for regional development. BIMSTEC is a relatively young organization among the various regional and sub-regional grouping in Asia. This paper investigate growth of Intra-regional trade and investment among India and BIMSTEC nations and their prospects and challenges. Time series data has been used to calculate intra-regional trade with Intra Industry Trade (IIT) index and econometric model i.e. ARIMA (Auto Regressive Integrated Moving Average) has been used for analysing prospects of trade and investment. The group demonstrate that there is momentous progress to expand the intra-bloc trade and investment with preferential liberalisation within the regional arrangement.

Regional and inter-regional economic rules and the enforcement of the right to health: The case of Colombia.

The regional policy level is often seen as a (potential) source of progressive policy-making in health (and in social policy more widely), complementing or substituting national policy levels, which are perceived as underperforming. While it can certainly be argued that there are important opportunities to adopt regional approaches to tackle border-crossing health issues, this article draws the attention to the fact that the linkage between (inter-)regional and national policy levels is not uni-directional. While in some instances the regional level may indeed take the lead in the promotion of (the right to) health, in other instances it may well be the other way round. This article focuses on the case of Colombia, where international economic rules have deeply permeated public policies in the health sector. On one hand, Colombia has been opening markets through the conclusion of regional integration arrangements (e.g. Andean Community and the Pacific Alliance) and the new generation of Free Trade Agreements. On the other hand, Colombia has been one of the most active emerging countries in promoting the right to health as a justiciable fundamental right, in line with the International Covenant on Economic, Social, and Cultural Rights of the United Nations mainly due to the judicial activism of the Colombian Constitutional Court with interesting implications for regional social governance. The article shows that national courts can play an important role in the protection of the right to health in a context of economic integration and the absence of regional balancing policies.

THE REGIONALISM IN THE WORLD ECONOMY: NOVEL EXPECTATIONS FROM AN OLD HABIT

World economic relationships have recently been transformed by a process of globalisation whereby economic activity between nations and blocs of nations has become influenced by and (arguably) inextricably linked to the resurgence of the re- gional integration arrangements (RIAs). This article postulates that, despite the fact that regional bloc formation is not something new, the old theory and practice of re- gionalism cannot adequately describe the spirit and structure of modern RIAs. This study attempts to assess what countries expect to gain from membership of RIAs and tries to distinguish the motives and forces which derive them towards such or- ganisations. In this respect, modern RIAs are compared with the initial, post-war, model of regional integration. The authors seek to establish that, as regional econ- omies have become increasingly interdependent and homogenous, ever deeper re- gionalism has become the favorued means of economic regulation unless prompt and wide-ranging multilateral solutions are available to reverse this trend.

Regional integration in Africa versus higher levels of intra-Africa trade

Regional integration arrangements have mushroomed worldwide, both on intra-regional and extra-regional levels. On an intra-regional level, Africa faces a complicated grid of multiple and overlapping membership of several regional integration organisations, aiming to increase intra-regional trade and cooperation. In this study, a comparative analysis will be executed, based on an intra-regional breakdown of trade, using the United Nations Economic Commission for Africa classification of countries according to geographical region. The level of intra-regional trade will be determined, whereafter the level of inter-regional trade will be established and, lastly, trade with the rest of the world. It seems that despite the high level of regional integration within Africa, it does not necessarily stimulate intra-Africa trade to expected levels as proposed by literature. A regional integration strategy that would cause deeper integration is crucial if the continent is to play a rightful role in the global arena.

Regional integration and nuclear energy in Africa

African states are hampered by unreliable electric energy that has not complemented economic development efforts. Recently, several African states announced plans to pursue nuclear energy in the future. However, several challenges remain for these states, notably insecurity and financial deficiencies. This paper proposes the use of regional integration arrangements to address these challenges faced by African states, as a way of complementing other efforts enabling African states to obtain nuclear energy. The existence of these arrangements and their institutional mechanisms can enable African states to enhance security and cost-effectively develop nuclear power infrastructure.

Szinergiakeltés vagy látszatcselekvés? Az afrikai regionális integrációk problémái

A regionális integrációk a gazdasági/társadalmi fejlődést elősegítő szinergiákat képesek kelteni a pozitív impulzusok komplexumával. Erre a dinamizáló erőre a legszegényebb kontinensen, Afrikában lenne a legnagyobb szükség. Azonban az életképes, hatékony regionális integrációk létrejöttét és főként működését számos tényező nehezíti. Ilyenek az országcsoportokon belüli drasztikus fejlettségbeli különbségek (amelyeket a legerősebb „vezér” tagállamok – például Dél-Afrika, Nigéria – önző módon kihasználnak), a tagországok közötti konfliktusok, az intrakontinentális nemzetközi kereskedelem jelentéktelensége, a közlekedési infrastruktúra anakronisztikus állapota, valamint a feleslegesen sok regionális integráció közötti igen gyakori részleges (esetenként teljes) területi átfedés. A felsorolt és egyéb körülmények miatt Afrikában óvakodni kellene az európai viszonyokra kidolgozott integrációs modellek másolásától, és a helyi sajátosságokat figyelembe vevő módosításokra lenne szükség.

The EU-Korea Free Trade Agreement: Making of a "Deep" Free Trade Agreement

Korea a dynamic newly-industrialized economy, and the EU, the largest economic block have negotiated an FTA. It came in force on July 1, 2011. Before the FTA was formed, the two were important trading partners of each other. Korea has enjoyed a trade surplus in merchandise trade vis-à-vis the EU. An overwhelmingly large proportion of EU-Korea trade is in manufacturing products. The EU took has had a surplus in trade in services vis-à-vis Korea. The FTA protocol has specified lowering of tariffs and NTBs in a phased manner over a transition period. The FTA had sector-focused negations. Technological standards and environmental considerations are a part of the FTA protocol. It has a comprehensive coverage and in trade economics parlance known as a “deep” regional integration arrangement. The impact of the FTA on the two partner economies would be positive but small. The empirical analyses predictably concluded that of the two, the FTA will benefit Korean economy relatively more in terms of welfare gains, while the EU economy will only gain modestly. An important fact that will influence the welfare gains is that the magnitude of the EU trade with Korea; it is only 2 percent to 2.5 percent of total extra-EU trade. Sectoral impact of the FTA will be important for both the EU and Korea and this article elucidates which sectors will benefit more than others. To protect domestic producers and markets from sudden surge in imports, there is a provision of a bilateral safeguard clause in the FTA.

Regional Integration in Africa

This paper examines the history of regional integration in Africa, what has motivated it, the different initiatives that African governments have pursued, the nature of the integration process, and the current challenges. Regional integration is seen as a rational response to the difficulties faced by a continent with many small national markets and landlocked countries. As a result, African governments have concluded a very large number of regional integration arrangements, several of which have significant membership overlap. While characterized by ambitious targets, they have a dismally poor implementation record. Part of the problem may lie in the paradigm of linear market integration, marked by stepwise integration of goods, labour and capital markets, and eventually monetary and fiscal integration. This tends to focus on border measures such as the import tariff. However, supply-side constraints may be more important. A deeper integration agenda that includes services, investment, competition policy and other behind-the-border issues can address the national-level supply-side constraints far more effectively than an agenda which focuses almost exclusively on border measures.

On the Size and Number of Regional Integration Arrangements: A Political Economy Model

Will the current wave of regional integration arrangements lead to the world being divided into competing inward-looking trading blocs? Or will it lead to a more open multilateral trading system? Using a multi-country political economy model, and after having shown that global free trade is optimal, the author investigates the possibility of achieving it through regionalism. An outsider country considering entering a trading bloc must weight the tradeoff between the costs of opening its own market to more foreign competition and the gains from getting better access to the bloc's preferential market. The gain of access is always larger, so an outsider would always want to apply for membership in the existing bloc. If the bloc policy is open membership, its expansion would result in global free trade. But if member countries can accept or reject new members, expansion of the bloc is unlikely to yield global free trade. When deciding whether to accept or reject new member, an insider compares the gains from getting preferential access to the new member's market with the losses from having to share its original preferential market with the new member. When the bloc is small, the gains are large enough to offset the losses, so insiders are willing to accept new members. As the bloc expands, the insiders'incentive for expanding decreases, eventually to zero. If only one regional integration arrangement were allowed to form, insiders would stop accepting new members when half the world belonged to the bloc. The remaining outsiders would probably form a bloc of their own, which would lead members of the original bloc to increase its size in anticipation of the creation of the second bloc. The threat of regionalism by outsiders would foster larger regional integration arrangements. In this model, the typical sub-game perfect equilibrium would be two blocs, one of them containing roughly two-thirds of the world, the other containing roughly one-third. Even if blocs form and merge simultaneously, yielding progressively larger symmetrical blocs, they would fail to converge in a single bloc unless the external tariff were low enough. In other words, global free trade could be achieved through bloc expansion if trading blocs lowered their external tariffs when abolishing their internal tariffs.

Democratization and Trade Policy: An Empirical Analysis of Developing Countries

This study shows that the process of democratization constitutes an important factor in implementing regional liberalization. Specifically, when compared to unilateral and multilateral trade liberalization, forming a regional trade agreement involves lower political costs for decision-makers. Thus, assuming that moving towards a democratic regime forces political leaders to implement trade liberalization in order to please the median voter, the decision to form a regional trade agreement is usually the easiest and the most feasible to execute. Moreover, democratizing LDCs are more likely to form a PTA with richer countries, whereas there is little evidence that democratic transition affects the probability of an LDC joining a PTA with other LDCs. Finally, in the presence of a cluster of democratization in a given historical period neighboring countries are likely to share an interest in liberalizing trade, thereby easing the bargaining process, which generally represents the main obstacle to the formation of a regional integration arrangement. This paper quantitatively tests these hypotheses using a newly compiled dataset that covers 135 developing countries from 1990 to 2007.