Thomas Kalinowski Ewha Womans University

1. European and Asian monetary cooperation and integration from the perspective of comparative regional political economy (CRPE) Thomas Kalinowski Ewha Womans University

2. Contents • Global changes diverging regional solutions: Collapse of the Bretton Woods System • A comparative regional political economic interpretation • Similarities of non-liberal capitalisms in Europe and East Asia • Differences in economic structure between EU and East Asia • The PE of monetary policies and cooperation in Europe and East Asia

3. 1. Global changes diverging solutions: Collapse of the Bretton Woods System • Collapse of Bretton Woods System 1971 • End of gold guarantee and fixed exchange rates • Acceleration of financial globalization • Diverging regional solutions: • Market orientation in UK,US • Deepening of regional integration in Europe • Emergence of national developmental states in East Asia

4. Trilemma of economic policies • Euro Capitalism • EMSEMU • Four freedoms • ECB • No bail out clause ‘Bretton Woods Corner’ Goal: stable exchange rates EC/EU ‘Neoliberal Corner’ Goal: open capitalaccounts Bretton Woods System -1971 East Asia • Financialized capitalism • Free floating • Capital account lib. • Expansive macroeconomic policies • East Asian Capitalism • Unilateral pegs • Slow market opening • Economic planning • CMI • Gold-dollar standard • Embedded liberalism • Keynesian macroeconomic policies • IMF GB, USA ‘Keynesian Corner’ Goal: sovereign monetary and fiscal policies ‘Developmental State Corner’ Goal: sovereign monetary & industrial policies

5. What can explain the divergence between Europe and East Asia? • Why did Europe find regional solutions while East Asia had to resort to national self help? • Dissatisfaction with “realists” • Dissatisfaction with constructivists • Dissatisfaction with economists (Optimal Currency Area Theory) • Go beyond realism and functionalism

6. 2. A comparative regional political economic interpretation • CPE (diversity of capitalism/regulation school): • Institutional change, interest struggle, structure • No convergence amid globalization • Problem: Too much focused on national political economies • Regional integration studies: • Multi-level institutional framework • Regional convergence (in global divergence) • Problem: Too much focused on institutional change • CRPE: • Highlight interaction between national and regional level • Focus on interest group rivalry and structural drivers of institutional change • Limits: National and local differences

7. 3. Similarities of non-liberal capitalisms in Europe and East Asia • Maintaining strong manufacturing base • Relatively low level of financialization • Export orientation • Increasing intraregional trade  Interest in: • Stable exchange rates • Mitigate problems of financial instability • Prevent upward pressure on currencies • Stable environment for international creditors • Why the divergence?

8. 4. Differences in economic structure between EU and East Asia

9. 5. The PE of monetary policies and cooperation in Europe and East Asia

10. Conclusions • There is a regional convergence in the global divergence of monetary policies • Regional solutions in EU versus national solutions in East Asia • CMI is not (yet) regional integration, but a regional supplement of national strategies • The divergence can be explained by distinct economic structure and political economy • The combination of CPE and regional integration studies helps to understand driving forces of monetary policy policies and cooperation in Europe and East Asia.

11. Annex 1: Exports as Percentage of GDP

12. Annex 2: Current Accounts as a Percentage of GDP

13. Annex 3: Intraregional trade (% of total trade)

14. World Trade

15. Maastricht Convergence Criteria

18. Long term interest rates of euro zone countries (%)

20. Average yearly inflation in Eurozone countries, 1999-2007

22. Government spending as percent of GDP

23. Social Expenditure as percent of GDP