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GO 357 The Political Economy of Regionalism

GO 357 The Political Economy of Regionalism. Walter Hatch Colby College Lecture One. Trend One. Economic activity increasingly concentrated in regions Europe North America Asia. Intra-Regional Exports (US$ billion). INTRA-REGIONAL TRADE. VALUE. 1.E+09. 9.E+08. 8.E+08. 7.E+08.

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GO 357 The Political Economy of Regionalism

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  1. GO 357The Political Economy of Regionalism Walter Hatch Colby College Lecture One

  2. Trend One • Economic activity increasingly concentrated in regions • Europe • North America • Asia

  3. Intra-Regional Exports(US$ billion)

  4. INTRA-REGIONALTRADE VALUE 1.E+09 9.E+08 8.E+08 7.E+08 6.E+08 1980 1990 5.E+08 2001 4.E+08 3.E+08 2.E+08 1.E+08 0.E+00 NAFTA Other Euro-12 Other Americas CIS MENA Europe SSA Asia- Pacific

  5. Trend Two • Proliferation and expansion of regional trade agreements and institutions • EU • NAFTA, CAFTA, FTAA • ASEAN, APEC, EAEC,

  6. Growth in RTAs(average number of notifications to GATT/WTO per year)

  7. Growth in RTAs

  8. A World of Regions

  9. Does regionalism undermine the post-warliberal international economic order?

  10. Liberal Economic Order • General Agreement on Tariffs and Trade (GATT)/ World Trade Organization (WTO) • GATT created in 1947; became WTO in 1995 • 150 members; one country = one vote • Multilateral approach via “most favored nation” clause (non-discrimination) • Article 24 of GATT allows regional trade agreements – but only if they eliminate or substantially reduce barriers in virtually all sectors • Bretton Woods system/IMF and World Bank • U.S. exercises veto power (17% of quota) • Discourages regional institutions

  11. Views on Regionalism • Economists • Some fret that regional negotiations jeopardize multilateral negotiations • Some gush that they serve as a stepping stone on road to global trade regime • Political scientists • Some see a safer world. Look at Europe. • Some recall the 1930s: a world of inward-looking blocs

  12. Who else cares?

  13. Anti-globalization activists Regionalization as “mini-globalization,” more corporate power

  14. Non-American Policy-makers Regionalism as a check on IMF, WTO, US power

  15. Defining Terms:What’s a Region? • An area encompassing two or more relatively proximate nations that have • Shared sense of political or cultural identity and/or • Potential for economic complementarity and/or interdependency

  16. Defining Terms Redux • Regionalization (an economic process) market integration associated with the cross-border flow of capital, labor, and technology within a specific area or region • Regionalism (a political process) cooperation among states to create institutions to help bring about or support economic integration in a region

  17. Which comes first? Who knows? (It doesn’t matter…)

  18. Two Big Questions • Why do states agree to give up (or pool) sovereignty? • gains from trade? • political power? • shared identity? • Why do regional projects vary so much (especially in terms of depth of legalization/institutionalization)?

  19. Hierarchy of RTAs • Preferential Trade Agreement • Free Trade Agreement • Customs Union • Common Market • Economic Union

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