The political economy of contemporary regional integration : evidence and interpretation
This research takes a rigorous approach to examining available data for signs of regional integration and interprets the findings in terms of their illustration of the changing structure of the international political economy. A range of methodologies are examined and the inadequacies of various commonly-used approaches to measure regionalisation are discussed. Bearing this in mind, statistical measures of regional bias are developed, and time series of results are displayed to show trends in the three major economic areas over the past three decades in a way that has not been attempted in other studies. The findings suggest that regional integration has been advancing steadily in North America and Europe and there are suggestions that preferential trading arrangements have helped to promote closer regional integration. Surprisingly, the preferential bias between the founder members of the European Union is little changed in the past three decades. In the developed world the non-discriminatory qualities of some of the deeper aspects of regionalism have helped to blunt its preferential impact, as have corporate organisational strategies, which are also important in shaping regional production. The impact of preferential regional arrangements on internalisation of corporate transactions is ambiguous. It is argued that multinational corporations are less concerned about whether liberalisation is regional or multilateral than is commonly assumed. This makes the "building block-stumbling block" debate less important than the question of whether barriers to cross-border business are declining. Taking the analysis down to the micro level highlights the complex relationship between trade and investment flows which is not captured in theoretical literature or the available statistics. Although economics can explain the attractiveness of regional agreements, political economy explanations are useful to explain its growing popularity. One neglected issue is the benefit resulting from lower systemic risk. A more accurate description of the structural change identified in this research is that of "regional globalisation", where the prime concern of multinational corporations is that of globalisation, but it is a trend which is currently manifested through regional organisation. This is not a fixed trend and could be superseded by sub-or supra-regional integration depending on technical change and political co-operation.