Comparative Regional Integration

One of the most striking facts about the modern global political economy is that it is organized so strongly on a regional basis. For all the talk of globalization, many indicators of globalization (for example, trade, foreign direct investment, international institutions) are directed toward regional partners. In Western Europe, imports and exports increasingly have an origin and destination within the same area, and much the same can be said for North America and East Asia. From a global and national viewpoint, the regionalization of economic and political activity presents a puzzle. From a global vantage point, regional trade institutions are clearly sub-optimal and may even pose severe obstacles to wider integration (Bhagwati, 1992). If market enlargement, specialization and exchange are good (that is, efficient), why don't global solutions clearly trump regional ones? From a national standpoint, if security is considered along with economic exchange, then diversification of trade partners would seem valuable, and in some sense the further away one's partners the better. The spatial (regional) concentration of economic activity runs against prudent security concerns. Distant partners tend not to be security threats. Both neoclassical economics and realism would seem to hesitate about regional organization. Yet economic and political activities increasingly cluster in regional patterns.

Three regions (Western Europe, North America and East Asia) constitute the most prominent zones of global economic integration. There are other regions of importance, for example, southern Africa, Central Europe (increasingly drawn into the West), the Middle East, the Pacific Rim, South America, and sub-regional economic zones (‘natural economic territories’) like the Greater South China Economic Zone (Hong Kong, Macao, Guangdon, Fujian Provinces, Taiwan) and the Growth Triangle including Singapore, Batam Island in Indonesia, and Johor Province in Malaysia (Haggard, 1995: 66). Regions, like nations, can be created and destroyed. Northeast Asia is more of a region today than it was thirty years ago, in large part due to the powerful role of Japan and Korea in stimulating economic growth in the region. By the same token, for nearly a half century of the Cold War, the term ‘Mitteleuropa’ all but disappeared from our geopolitical vocabulary. The tight bipolarity in Europe from 1945 to 1990 eroded the middle as gradually most countries were assimilated into the Eastern or Western bloc. Since 1990, we can speak once again of Central Europe and Mitteleuropa, though in a different way from before 1945 (Ash, 1999; Kundera, 1984).

Regional integration is a widespread phenomenon that transpires in almost every part of the world. The GATT received 124 notifications of regional trading arrangements (RTAs) in the period 1948–94, and from 1995 onwards 90 additional arrangements have been notified. Among them, about 134 RTAs are in force at present (WTO, 1999: 4). Currently, almost every member of the World Trade Organization (WTO) is a member of at least one such an arrangement (if APEC is included). However, few regional trading arrangements, except the European Union (EU), have moved in substantial ways beyond the stage of free trade area and customs union. Most of the free trade areas (FTAs) have not been able to achieve even their stated goal, that is, free trade among member countries. The proliferation of regional organizations, as well as their uneven success and longevity, prompts us to inquire further.

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