2 Stages of economic integration

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Information about 2 Stages of economic integration
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Published on March 19, 2008

Author: iloor

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Slide 1: Stages of Economic Integration REGIONAL INTEGRATION AND COOPERATION UEES LECTURE 2: Stages of Economic Integration Source: UNU – Programme for Comparative Regional Integration Studies Prepared by: Ignacio W Loor, MIBA – Economist Slide 2: OUTLINE WHAT IS A REGION? Introduction – The problem of definition Geographic and non-geographic regions Micro-Regions & Macro-Regions Cross-Border Regions Sub-Regions Middle-East Example WHAT IS INTEGRATION? Integration as an outcome Integration as a process Integration as combination of outcome and process Integration and sovereignty Degree of Unity Order and Power DIFFERENT FORMS OF INTEGRATION Free Trade Area Customs Union Common Market Economic Union Political Integration Security Integration Slide 3: WHAT IS A REGION? INTRODUCTION Region is a Latin word that means "direction".  Region was defined as the territory controlled by a regent and his regiment, so it should not come as a big surprise that a region had indeterminate boundaries. The term "region" means different things to different people. Regions can be defined variously by: geography, economic interaction, institutional or governmental jurisdiction, or by social or cultural characteristics. THE PROBLEM OF DEFINITION There is no standard definition of a region, and there are no universal rules for recognizing, delimiting, and describing regions. Region is not a formal organisation Although regions are not naturally constituted geographical units, they cannot exist without having a physical reality. Thus, territoriality is a sine qua non of regions Regional borders are the products of a continuous process of construction and deconstruction, which implies that regional borders are mutable Regions have their own internal dynamic: they may become important vehicles of power, shaping the spaces of governance, economy and culture Slide 4: GEOGRAPHIC AND NON-GEOGRAPHIC REGIONS While regions are most defined in terms of geographic proximity, it is equally possible to opt for a non-geographic definition. For instance, "currency" region, a group of states, which rely on one member's currency and whereby these states are not necessarily located in close proximity Geography does not identify which country should be included in a region. Thus, geography is at best an indicator, a sort of starting point Regional designations are no more "real" in terms of geography than they are "natural" in terms of culture“ (Katzenstein) For instance, if we talk about the "West", it encompasses now Western Europe, the US, Canada, Australia, and Japan. The "Islamic world" is by no means limited to the Middle East, but stretches from Indonesia to Nigeria and Northern Africa WHAT IS A REGION? Slide 5: TYPES OF REGIONS MICRO-REGIONS Territorial area that is smaller than a state to which it belongs, but larger than a municipality Typical examples of such micro-regions are provinces, districts, departments or even mega-cities CROSS-BORDER REGION A cross-border region is actually a special case of a micro-region, whereby the micro-region spreads across different states Example: The “Pacific Northwest Economic Region” formed by 5 US states (Washington, Oregon, Idaho, Montana, and Alaska) and two Canadian provinces (British Columbia and Alberta) WHAT IS A REGION? Slide 6: MACRO-REGIONS A limited number of states linked together by a geographical relationship and by a degree of mutual interdependence (Joseph Nye) Examples of macro-regions are the “Pacific Region” and the “Mediterranean Region”. Other examples are European Union and Mercosur. From a geographical perspective one can distinguish the following regional 'realms' in the world: * Europe * Russia * North America * Middle America    * South America * North Africa/Southwest Asia * Sub-saharan Africa    * South Asia * East Asia * Southeast Asia * Austral Realm * Pacific Realm SUB-REGIONS Within the realms of Macro-regions one can also identify smaller regional entities, sometimes called 'sub-regions' How people choose to define Europe will have a significant impact on how they think both about security (in a broad sense) in Europe and Europe's relations with the outside world For instance, to many people Europe means simply the European Union WHAT IS A REGION? Slide 7: MIDDLE EAST EXAMPLE 1902 – Area between Arabia and India WHAT IS A REGION? Slide 8: After WWI – Jordan, Palestine, Iraq, Syria and Lebanon were also considered Middle East WHAT IS A REGION? Slide 9: After WWII – All from North African lands to the west of India WHAT IS A REGION? Slide 10: Arab Regional Order WHAT IS A REGION? Slide 11: WHAT IS INTEGRATION? There is no clear definition of the word "integration", despite the common use of the word: a town's modern architecture is quite well integrated with the old, you integrate yourself into the modern society, what about an integrated circuit? Perception of integration depends on its definition as a terminal condition, a process, or a combination of both INTEGRATION AS AN OUTCOME Describes integration as something static, whereby a situation of integration is achieved only when certain predefined criteria are fulfilled For instance, if we consider the formation of the EU as a process of institutionalisation, we could examine how "integrated" the EU is at a certain point in time, thus study the degree and type of integration as a characteristic of the EU INTEGRATION AS A PROCESS Integration as a dynamic process refers to the development of a state of isolation to a condition of integration INTEGRATION AS A COMBINATION OF OUTCOME AND PROCESS Defines integration as any level of association ascertained by specified measures. This way of defining integration allows the researcher to speak of various types of integration (economic, social, political et cetera), and of various levels of integration Slide 12: INTEGRATION AND SOVEREINGTY Integration would be interpreted as the process by which the formerly independent units hand over a fraction of their sovereignty to common institutions Sovereignty is an attribute of a state, which refers to its right to exercise absolute jurisdiction over its own territory. It is the claim to political authority based on territory and autonomy No one has the right to tell a state how to conduct its domestic or foreign affairs States differ in power, but as sovereign entities they are legal equals. In other words, sovereignty is a legal term describing the formal authority of a state DEGREE OF UNITY It indicates to what extent the system (e.g. the region, the state, ...) forms an integrated part. There are two dimensions involved: 1. an external dimension: how does the system relate to its environment? 2. an internal dimension: how does the system manage its internal affairs? It is the system's degree of order, which determines the capacity of the system to make its members behave in mutually beneficial ways and to effectively mobilise, use and coordinate the efforts and resources of its members WHAT IS INTEGRATION? Slide 13: ORDER AND POWER The order or capacity of a system is a crucial component of its power Order gives a system the needed foundation for its survival and forms the prerequisite for its wealth, internal peace and cultural development The order of a system increases the power of the system because order provides organisation, which is a fundamental ingredient of effective collective action Imagine a group consisting of powerful members, without order or the ability to steer the behaviour of the members, this group remains just a collection of aimlessly behaving individuals with a high probability that they will rather impede than motivate each other The members of a highly ordered system will themselves become more powerful, because they are enabled to put the information and the resources that they possess to a profitable use WHAT IS INTEGRATION? Slide 14: DIFFERENT FORMS OF INTEGRATION Societies are complex social systems, characterized by a high degree of differentiation but at the same time held together by a high degree of integration Although this is not always the case, some societies are fragmented, while others have a certain degree of coherence, depending on the relative strength of integration and differentiation between the subsystems As societies are composed of different sectors, we can distinguish different forms of integration, namely: economic, political, security, ... Integration ECONOMIC INTEGRATION Process whereby the economic barriers between two or more economies are eliminated Involves specific policy decisions by governments designed to reduce or remove barriers to mutual exchange of goods, services, capital and people The economic integration process is often represented as a staged process, going from a preferential trade area to a total economic integration Following the different forms of economic integration: Free trade area, customs union, common market, economic union, and political integration Slide 15: PRODUCTS LABOR CAPITAL - TECH CAPITAL - FDI FREE FLOW RESTRICTED FLOW Free trade area Slide 16: PRODUCTS LABOR CAPITAL - TECH CAPITAL - FDI FREE FLOW RESTRICTED FLOW Customs Union Slide 17: PRODUCTS LABOR CAPITAL - TECH CAPITAL - FDI FREE FLOW RESTRICTED FLOW Common market Slide 18: PRODUCTS LABOR CAPITAL - TECH CAPITAL - FDI FREE FLOW RESTRICTED FLOW Economic union Slide 19: PRODUCTS LABOR CAPITAL - TECH CAPITAL - FDI FREE FLOW RESTRICTED FLOW Political integration Slide 20: Thank You!

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