The social and economic dimension of the European Neighbourhood Policy

1. The social and economic dimension of the European Neighbourhood Policy Prof. Dr. Zoltán CséfalvayAndrássy Gyula Deutschsprachige Universität Budapest zoltan.csefalvay@andrassyuni.hu

2. The social and economic dimension of the European Neighbourhood Policy • Stages of the regional economic integration • The long way from the first into the second international division of labour • A mixture of development paths - the third international division of labour • The European economic continental block is emerging Prof. Dr. Zoltán CséfalvayAndrássy Gyula Deutschsprachige Universität Budapest, zoltan.csefalvay@andrassyuni.hu

3. The stages of theregional economic integration (Béla Balassa) • Free Trade Zone: customs were abolished within the member-states of the zone, but every country has its own customs regime against the non-member-sates • Customs Union: customs were abolished within the member-states of the zone, and every country has the same customs regime against the non-member states

4. The stages of the regional economic integration (Béla Balassa) • Single (Common) Market:customs were abolished within the member-states of the zone, and every country has the same customs regime against the non-member states,and there is a free move of production factors (e. g. labour, capital, information) within the member-states of the zone • Economic Union: customs were abolished within the member-states of the zone, and every country has the same customs regime against the non-member states,and there is a free move of production factors (e. g. labour, capital, information) within the member-states of the zone, and the member-states develop a common framework for economic policy (e. g. agriculture policy, competition policy)

5. The stages of theregional economic integration (Béla Balassa)

6. Organisations for regional economic integration in America • 1994: NAFTA (North American Free Trade Agreement), member-states are Mexico, USA, Canada, works as a free trade zone. • 1991: MERCOSUR (Mercado Commun del Sur), member-states are Argentina, Brazil, Paraguay, Uruguay, Chile, Bolivia, works as a customs union. • 1990: ANCOM (Andean Common Market), member-states are Bolivia, Columbia, Ecuador, Peru, Venezuela, works as a customs union.

7. Organisations for regional economic integration in Asia • 1993: AFTA (ASEAN /Association of South East Asian Nations/Free Trade Agreement),member states are Brunei, the Philippines, Indonesia, Malaysia, Singapore, Thailand, works as a free trade zone. • 1989: APEC ( Asia-Pacific Economic Cooperation), member-states are Australia, Brunei, Chile, South Korea, USA, the Philippines, Hong Kong, Indonesia, Japan, Canada, China, Malaysia, Mexico, Russia, Papua New-Guinea, Peru, New-Zeeland, Singapore, Taiwan, Thailand, Vietnam, after 2010 will work as a free trade zone • APEC: A Perfect Excuse to Chat?

8. Organisations for regional economic integration in Europe • 1951: Montanunion(European Coal and Steel Community, ECSC): member-states are France, Germany, Italy, Belgium, the Netherlands, Luxemburg, • 1957 (Treaty of Rome): European Economic Community (EEC) • 1958 – works as a free trade zone • 1968 – works as a customs union • 1991 (Treaty of Maastricht): European Union – works as a single market • 1999 works as aneconomic union (e. g. the euro will have become the common currency)

9. Benefits joining the regional economic integration in Europe • Effects of free trade – mutual gains resulting by abolishing the trade barriers • Effects of single market – mutual gains resulting by producing for a large market (economy of scale) • Effects of free mobility – mutual gains resulting by mobility of the production factors (capital, labour, etc.) • Effects of solidarity – mutual gains resulting by financial support the less developed countries.

10. The social and economic dimension of the European Neighbourhood Policy • Stages of the regional economic integration • The long way from the first into the second international division of labour • A mixture of development paths - the third international division of labour • The European economic continental block is emerging Prof. Dr. Zoltán CséfalvayAndrássy Gyula Deutschsprachige Universität Budapest, zoltan.csefalvay@andrassyuni.hu

11. First international division of labour • Time: 1800-1970 • inter-industry division of labour • Countries had specialised on products and braches with comparative advantages (David Ricardo)

12. Second international division of labour • Time: 1975-1995 • Driving forces: Lowering transaction cots via new transport and communication technologies • Widening the organisational structure of the companies on world-wide scale: • Centre - the highest level of the organisation: long-term planning, strategic management, overall control, • Semi-Periphery - the middle level of the organisation: highly automatic steeps of productions with high skilled workers • Periphery - the lowest level of organisation: standardised mass production with low skilled workers (assembly line production)

13. Second international division of labour • Time:1975-1995 • intra-industry (intra-firm) division of labour, • Driving forces: trans-national companies (TNCs) • How does it work? Shifting low value-added mass production in the peripheral regions of the world economy • Consequences: newly industrialized countries (NIC), emerging markets

14. Fundamental change of the economic policy in the developing countries Import-Substitution Industrialisation (ISI) • Raúl Prebisch (President of the National Bank in Argentina) in the 1930th • Objective: Fostering home-grown industries which products earlier were imported • Tools: exchange rates, customs for import, support of „enfant industries“ with multiplication effects • Results: development of a home-grown industrial base, but weak international competitiveness of the companies because of the missing international competition.

15. Fundamental change of the economic policy in the developing countries Export-Led Growth (ELG): • New trends after 1980: Fostering the foreign direct investments, especially those, which produce for export • Theoretical background: Washington Consensus (John Williamson) • Results: export, GDP, and employment grow, but modernisation remains regionally very restricted (missing multiplication effects)

16. Regional hierarchy of the world economy – Immanuel Wallerstein • Uneven - but regionally very differentiated - global expansion of market system since the 15th century • Stage in the economic development (and welfare), and • Stage in the regional hierarchy and the structure of dependence

17. The regional structure of the world economy 1800 Quelle: P. L. KNOX u. S. A. MARSTON, 2001, S. 67

18. The regional structure of the world economy 1900 Quelle: P. L. KNOX u. S. A. MARSTON, 2001, S. 67

19. TRIAD The regional structure of the world economy 2000 Quelle: P. L. KNOX u. S. A. MARSTON, 2001, S. 67

20. Jack Welsh’s Paradigm “The winners in these global games will be those who canput together the world’s best in design,manufacturing,research,execution,and marketing on the largest scale. Rarely are all of these elements found in one country oron one continent.” Welch, Jack F. Jr. (1987) Evolving Industrial Alliances. The Bridge, 17(4), S. 10.

21. The power of the triad – Kenichi Ohmae

22. ESRC (2003) ’Globalizing’ Regional Development: A Global Production Network Perspecticve. GNP Working Paper 3, May, ESRC Research Project R000238535: Making the Connections: Global Production Networks in Europe and East Asia. http://www.art.man.ac.uk/Geog/gpn/pdfs/gpnwp3.pdf

23. The social and economic dimension of the European Neighbourhood Policy • Stages of the regional economic integration • The long way from the first into the second international division of labour • A mixture of development paths - the third international division of labour • The European economic continental block is emerging Prof. Dr. Zoltán CséfalvayAndrássy Gyula Deutschsprachige Universität Budapest, zoltan.csefalvay@andrassyuni.hu

24. Third international division of labour • The role of a given country in the international division of labour will be determined by the mode of transition from fordist-type mass production into post-fordist type flexible production and regulation. • Countries are integrated in continental blocks according their mode of transition • Regionally the continental blocks organised in a centre-periphery pattern

25. Mode of transition from fordist-type mass production into post-fordist type flexible production and regulation – ALAIN LIPIETZ FLEXIBILITY • in the production (intern flexibility) • in the economic policy (extern flexibility) • Flexibility in the production: better use of time and space, such as lean production, just in time, total quality control, total quality management, CAD/CAM, etc.) • Flexibility in the economic policy: privatisation, deregulation, liberalisation

26. Mode of transition from fordist-type mass production into post-fordist type flexible production and regulation in the developed countries Kalmarism = low flexibility in economic policy (welfare state by regulation of wages via mass corporations) + high flexibility in production German model = low flexibility in economic policy (welfare state by regulation of wages via industries) + high flexibility in production Toyotism = low flexibility in economic policy (welfare state by regulation of wages via companies) + high flexibility in production Neotaylorism = high flexibility in economic policy (liberalisation) + low flexibility in production (taylorism)

27. Mode of transition from fordist-type mass production into post-fordist type flexible production and regulation in the developing countries primitive (‘bloody’) Taylorism: • low flexibility in production (taylorism) + high flexibility in economic policy • the lowest level of organisation - standardised mass production with low skilled workers (assembly line production) peripheral Fordism • low flexibility in production (taylorism) + high flexibility in economic policy • the lowest level of organisation - standardised mass production with low skilled workers (assembly line production) • the middle level of the organisation: highly automatic steeps of productions with high skilled workers

28. Kalmarism = welfare state by regulation of wages via mass corporations + flexibility in production German model = welfare state by regulation of wages via industries + flexibility in production Toyotism = welfare state by regulation of wages via companies + flexibility in production Neotaylorism= high flexibility in economic policy (liberalisation) +low flexibility in production (taylorism) Peripheral Fordism: high flexibility in economic policy (liberalisation) +low flexibility in production (taylorism) + highly automatic steps of productions with high skilled workersand standardised mass production with low skilled workers Primitve (bloody) taylorism:high flexibility in economic policy (liberalisation) +low flexibility in production (taylorism) + standardised mass production with low skilledworkers

30. The social and economic dimension of the European Neighbourhood Policy • Stages of the regional economic integration • The long way from the first into the second international division of labour • A mixture of development paths - the third international division of labour • The European economic continental block is emerging Prof. Dr. Zoltán CséfalvayAndrássy Gyula Deutschsprachige Universität Budapest, zoltan.csefalvay@andrassyuni.hu

31. Third international division of labour • The role of a given country in the international division of labour will be determined by the mode of transition from fordist-type mass production into post-fordist type flexible production and regulation. • Countries are integrated in continental blocks according their mode of transition • Regionally the continental blocks organised in a centre-periphery pattern

34. The social and economic dimension of the European Neighbourhood Policy THANK YOU FOR YOUR KIND ATTENTION! Prof. Dr. Zoltán CséfalvayAndrássy Gyula Deutschsprachige Universität Budapest zoltan.csefalvay@andrassyuni.hu