Theory of Economic Integration Descriptive background Katarzyna Śledziewska
[email protected] www.wne.uw.edu.pl/~sledziewska
What is economic integration? What is regionalism? • Definition and significance
International economic integration • Complex notion which must be defined with care • Does not have a clear-cut meaning for all economists • Definitions are often vague – Mess – Process or stage?
International economic integration • Pinder (1969) – Combination of parts into the whole. • Union is a outcome of the combination of these parts or members
– A process towards union – Removal of discrimination between economic agents of the member countries
• Kahnert te al.. (1969) – Process of the progressive removal of discrimination that exists along national borders
• Mennis and Sauvant (1976) – Process whereby boundaries between nation-states become less discontinuous, thereby leading to the formation of more comprehensive systems.
International economic integration • Pelkmans (1984) – Elimination of economic frontiers between two or more economies. – Economic frontier • A demarcation line across which the mobility of goods, services and factors is relatively low.
• Balassa (1973) – Process – the removal of discrimination between different states – State of affairs – the absence of different forms of discrimination
• Swann (1996) – Process or state of affairs that involves the combination of previously separate economies into larger arrangements
International economic integration • Molle (1991) – Prograssive elimination of economic frontiers between countries – This progress is gradual
• El-Agraa (1985) – Discriminatory removal of all trade impediments between participating nations and the establishment of certain elements of coordination between them
International economic integration • Tinbergen (1954) – Negative integration – removal of discriminatory and restrictive institutions and the introduction of freedom for economic transactions – Positive integration – the adjustment of existing and the establishment of new policies and institutions endowed with coercive powers
• Economic integration Goode (2003) – All economies, except those practicing autarky, are to some extent integrated • The term usually reserved for groups of economies that are manifestly combining their activities more quickly among themselves than with others – Market-led integration – spontaneous integration without the formal involvement of governments – Policy-led integration – integration through intergovernmental frameworks
Regionalism • Bhagwati (1999) – Preferential trade agreements among a subset of nations
• Goode (2003) – actions by governments to liberalize or facilitate trade on regional basis – offers a quicker way to achieve results for the participating economies than the full multilateral process
• Regional integration arrangement RIA Goode (2003) – bilateral or regional economic agreement
– seeks to achieve a degree of economic integration
• Regional trade arrangement RTA Goode (2003) – FTA, CU CM
International economic integration • Economic integration agreements Goode (2003) – Cover free-trade arrangements in services • Free trade in services requires the possibility of commercial presence in the importing country as well as the free movement of consumers and producers of services • Involves greater degree of economic integration
Regionalism - WTO context • More general – RTAs (regional trade agreements) may be agreements concluded between countries not necessarily belonging to the same geographical region; • EU and Turkey – no consesus exists on either geographical or cultural criteria
• More specific – the WTO provisions which relate specifically to conditions of preferential trade liberalization with RTAs http://www.wto.org/english/tratop_e/region_e/region_e.htm
Regionalism • “Regionalism is in fashion. • It seems that every month brings news of yet another agreement among a group of countries, or between one group and another, to strength their economic links, particularly by removing barriers to trade and investment among themselves”. • Frankel (1997)
Evolution of Regional Trade Agreements in the world, 1948-2009 • WTO members – are bound to notify RTAs in which they participate – all of them have notified participation in one or more RTAs (some are party to 20 or more)
• Notifications of RTAs – May refer to • New agreement • the accession of new parties to an agreement that already exists
– In the period 1948-1994 → 123 notifications – Since 1995 → over 300
Evolution of Regional Trade Agreements in the world, 1948-2009
Average number of PTA participants per WTO member, 1958-2010, notified PTAs
Map of RTAs by country, participation in Regional Trade Agreements for goods and services
Mongolia
Mauritania
Somalia
A hierarchy of regional economic arrangements
Free trade area
Common Customs market union
Economic union