Download IPE, CPE, globalization and regional integration

Globalization
- What is it?
o Friedman (2005), Keohane and Nye (1977, 1998), Held and McGrew (1998, 2000)
- What is the big debate? Globalization and its effect on national autonomy
o Garrett (1988)
- One side: globalization erodes national sovereignty and the ability of governments to effectively
manage (“race to the bottom”)
o Ohmae (1993), Sabel (1989), Keohane and Milner (1996), Strange (1996), Rodrik (1997)
- Another side: globalization does NOT erode national sovereignty and the ability of governments
to effectively manage
o Ruggie (1982), Vogel and Kagan (2002), Garrett (1998)
- Either way, globalization does not follow neoclassical economy theory – it actually helps and
hurts national economies differently
o Wallerstein (1974), Williamson (1997), Hall and Soskice (2001), Scott (2001)
- Globalization can mean many things, but it might be informative to look at one aspect of
economic globalization more closely: financial globalization
o Overview
 Frieden (1991), Cohen (1996)
o Convergence (cause/effect)
 Helleiner (1994), Kurzer (1993)
o Divergence (cause/effect)
 Sobel (1994), Kapstein (1994)
o Somewhere in between
 Goodman (1992)
- These debates focus so much on national autonomy that we get stuck in a world of international
institutions or markets v. states. Other actors may also be important, like transnational actors:
o Risse-Kappen (1996), Finnemore and Sikkink (1998), Keck and Sikkink (1998), Price
(1998), Acharya (2004)
Regionalization
- Clearly, there is an overwhelming literature on globalization, but some question whether this is
a useful construct. Might regionalization be better?
o Zysman (1996), Weiss (1998), Hirst and Thompson (2000), Castells (1993)
- What is regionalism?
o Mansfield and Milner (1999), Fishlow and Haggard (1992)
- PTAs -- what are they and what do they do?
o Viner (1950), Summers (1991), Krugman (1993), Bond and Syropoulos (1996), Bagwell
and Staiger (1997)
- Domestic politics and regionalism (society, institutions)
o Grossman and Helpman (1995), Eichengreen and Frankel (1995)
- International politics and regionalism (power/conflict, institutions/strategic interaction)
o HST, Gilpin (1975), Gowa (1994), regime theory scholars, Haggard (1997)
- Variations (depth of integration/institutional density, economic/political/cultural heterogeneity)
o Downs, et al. (1998), Katzenstein (1997)
- Linking regionalism and globalism (EU, East Asia)
o East Asia: Pempel (2000), Aggarwal and Koo (2005), Pempel (2010)
o EU: Garrett (1992), Pierson (1996), Aggarwal and Fogarty (2004)
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Globalization overview in context of IR theories and history: Nau (2007)
o Friedman (2005)
 Three versions of globalization: (1) 1492-1800, age of mercantilism and
colonialism which “shrank the world from a size large to a size medium,” with
the driving force being power/capabilities, (2) 1800-2000, interrupted by the
Great Depression and the World Wars, age of Pax Britannica and Pax Americana
which “shrank the world from a size medium to a size small, with the driving
force being MNCs or institutions, (3) beginning of 21st century, age of the
internet which is “shrinking the world from a size small to a size tiny and
flattening the playing field at the same time,” with the driving force being the
newfound power of individuals to collaborate and compete globally
 Version one = realist, version two = liberalist, version three =
constructivist
o Realism – power struggles continue to shape globalization and determine the evolution
of technology, institutions, and ideas; America’s preeminence (especially following the
rebound from 1970s oil shock and victory in Cold War) opened up the world for
technology, the internet, open markets, and democracy; version three of globalization is
different because America now has global predominance (version one = British, version
two = American, but only in the west); but, hegemony often doesn’t last and we see
counterforces developing, like terrorists and populist leaders
 Collapse of Bretton Woods: in 1960s, France challenged US leadership (de Gaulle
withdrew France from NATO, launched policy of détente with USSR); US
supplied necessary dollars to finance external accounts, but this led to foreign
countries holding these dollars; because US couldn’t change the price of gold,
the only way it could lower the value of the dollar was for Europe and Japan to
raise price of their currencies, but they liked undervaluing because exports were
cheaper  national prosperity; trade rules discriminated against US (example:
European Common Market – tariffs were zero within it, but excluded US;
Common Agricultural Policy reduced imports from US); US lost role as dominant
lender to banks based in Europe because MNCs wanted to exploit the zerotariffs  borrowing from European banks (US couldn’t send dollars because
Bretton Woods controlled capital flows)  unregulated Eurodollar market 
late 1960s, US switched to aggressive Keynesian policies with large budget
deficits, loose money, and domestic wage and price controls  tripled inflation
 suspended convertibility of dollars into gold  devalued in 1971, 1973 
dollar sank  floating exchange rate (before first oil crisis in October 1973)
 Oil: crises of the 1970s saw balance of oil power shift decisively from the
western oil companies (“seven sisters”) to the Organization of Petroleum
Exporting Countries (OPEC – originally composed of Saudi Arabia, Kuwait, Iraq,
Iran, and Venezuela); inflationary pressures in world economy plus the ArabIsraeli war of October 1973  OPEC officials announced 70% increase in price of
crude oil (first time “seven sisters” did not set world price) and embargo, cutting
production by five percent each month  higher prices  “stagflation” (slow
growth accompanied by high inflation) and volatile exchange rates/capital
movements that discouraged trade and foreign investment  ISI in most
developing countries (building up domestic industries to substitute for imports)
 private banks “recycled” the petrodollars which oil exporters deposited with
o
them by making loans to oil importing countries (realists say an alliance formed
with OPEC and developing countries to challenge industrial nations)
  developing countries organized “Group of 77” to champion cartels
and regulation of other world resource markets  proposals for the
“New International Economic Order” (NIEO) to set prices and supplies of
raw materials other than oil (Commodity Important Program) and
provide special and differential treatment for developing countries’
manufacturing exports, codes of conduct to expedite the transfer of
technology, MNC regulation, and generous programs of aid/subsidized
loans to promote development (Generalized System of Preferences)
  Group of 7 (G-7, 1976) advanced countries created new institutional
mechanisms – preserved open trading system, established International
Energy Agency (IEA) to coordinate importing country policies toward
OPEC and initiated a Conference on International Economic Cooperation
(CIEC) with OPEC countries to counter the proposals under NIEO
 1979 – second oil crisis hits (Iranian Revolution as proximate cause, plus
inflation, protectionism, and rapid financial expansion of world markets
in 1970s) and disruptions cut oil supplies and caused another price panic
 Rebound came from Reagan and Thatcher policies – rebuilt military defenses
and strengthened free markets in Cold War struggle; introduced policies to
reduce inflation, stimulate savings and investment, deregulate labor and capital
markets, and liberalize trade  once USSR was gone, US clearly dominant
 Debt crisis of 1980s (North-South relations strained)  IMF increased
lending again and banks rescheduled developing country loans, reducing
interest rates, increasing the number of years to repay, and promoting
structural reforms away from ISI
 Key question: who gains most? Two realist perspectives:
 Power transitions school – hegemons endure because moves toward
balance are dangerous and bring war
 Balance of power school – expects other states to rise and
counterbalance the hegemon
Liberalism – technology and institutions drive shifts in power and ideas; third version is
the “information revolution,” which moved jobs from manufacturing into services, just
as version one moved jobs from farms to cottage industries and version two moved
from rural industries to urban factories; trade relations entered a new era with Uruguay
Round extending free trade rules to cover services, agriculture, investment, and
intellectual property (GATT  WTO); capital markets liberalized; transnational and nonstate actors – like independent central banks, MNCs, financial houses – moved money
around the globe in the flash of an electronic transaction, constrained domestic
economic policies, and exacerbated trade accounts; NIEO had international institutions
proliferating and becoming more flexible; dense web of international economic
interactions put an increasing stranglehold on national sovereignty and made the use of
military force increasingly less likely (“complex interdependence”)
 Friedman (2005): it is the density, speed, and cost of globalization that are new,
not the fact; information technologies flattened, furrowed, and fertilized the
earth
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Flattening made it possible for poor countries as well as rich ones to
participate in global production; the flattened earth emphasizes brain
power because individuals anywhere with an education can participate
in the world economy; information technologies make human resources
count more than natural resources, factories, or MNCs
 Furrowing means tying the world together with broadband fiber-optic
cable and satellite transmissions; it magnifies exponentially the capacity
to transmit information simultaneously
 Fertilizing means fostering the emergence of all sorts of new
international organizations, particularly transnational or NGOs
 So, technologies like the internet create a new world to which powerful groups
and conventional ideas must adapt
 Emphasize interactions, path dependence, and spillover – once momentum
starts down a certain path of interactions, there is no going back to the starting
point (example: high volumes of trade spilled over into high volumes of finance)
 Global finance: Bretton Woods was stingy on finance, so US dollar
accumulated in unregulated offshore Eurodollar markets in 1960s, first
oil crisis popped cork that liberated financial markets because the
quadrupling of price in early 1973 (OPEC) wreaked havoc on domestic
economies as well as trade  higher prices, slower growth 
“stagflation”  instability in exchange rates  explosion of Eurodollar
markets  petrodollar recycling  liberalization of financial markets by
reducing Bretton Woods’ restrictions on capital flows
 See multilateral trade (WTO) and regional/bilateral agreements, like
NAFTA, APEC, ASEAN, and EC ( EU)
 Complex interdependence – financial crises marred the 1990s (Mexico  Russia
 Asian developing countries  Argentina)
Identity – emphasized battle of economic ideas and social reconstruction of
international norms and values; by the mid-1980s, more conservative free marketoriented policies made a comeback with Reagan and Thatcher that reduced government
spending, lower taxes, sound money and low inflation, deregulated labor and capital
markets, and freer trade  these ideas ( Washington Consensus – free-market/neoliberal view that embraced anti-inflationary measures, tax and spending cuts,
privatization, and deregulation – cite Williamson (1990)) created the favorable climate
that ignited the information revolution and globalization version three, just as laissezfaire ideas ignited the second industrial revolution and globalization version two
 Thatcher and Reagan: tax cut and deregulation movement
 G-7 summit in 1983 produced conservative policies  EU deregulated under
Single Market Act in 1987 and passed Pact on Stability and Growth to keep
budget deficits within certain limits
 This policy movement toward market-oriented ideas was crucial and received a
big boost with the collapse of the USSR
 Showed triumph of Hayekian conservative policies over Keynesian
interventionist policies in the 1990s
  spread of sustainable development ideas at the systemic level
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Fleshing out some of these overview ideas: Is globalization “complex interdependence”?
o Keohane and Nye (1977)
 Complex interdependence is a relationship characterized by costly effects,
which may reduce costs, impose costs, or provide benefits, caused by rapid
technological change and continued importance of state interests/power
(liberalism + realism)
 States fall on a continuum from realism  complex interdependence
 Interdependence does not imply cooperation
 Three characteristics:
 Multiple channels of contact among society – interstate, transgovernmental, and transnational relations (MNCs)
 Lack of clear hierarchies of issues – as new actors are incorporated into
the system, it is unclear which issues are most important
 Irrelevance of military force – increasingly costly for major states due to
risks of nuclear escalation, resistance by people in poor or weak
countries, uncertain and possibly negative effects on the achievement
of economic goals, and domestic opinion opposed to the human cost of
the use of force
 Sensitivity and vulnerability – if OPEC decides to produce less oil, thereby raising
prices, US consumers will be sensitive to this change because they are
dependent on oil; but, in the end, OPEC may also be vulnerable to this decision
because the US could develop alternative fuels (“an actor’s liability to suffer
costs imposed by external events even after policies have been altered”)
 Interdependence v. globalization: interdependence can be increasing or
decreasing, but globalization implies something is constantly increasing
o Keohane and Nye (1998)
 Revisiting “interdependence” in the context of the information revolution: what
is new is the virtual erasing of costs of communicating over distance; actual
transmission costs have become negligible
 This has dramatically changed the “multiple channels of contact among society,”
but not the other two characteristics
 Types of information: free, commercial (send at a price), and strategic (confers
great advantage on actors only if competitors do not possess it)
 Altered patterns of complex interdependence by increasing channels,
but exists in context of existing political structure  free information
flows faster without regulation, strategic will be protected, commercial
will depend on property rights
 Information revolution often thought to have a leveling effect – reduces costs,
economies of scale, barriers of entry to markets – but maybe not:
 Soft power strongly affected by cultural component (example: US
dominant in market share of films)
 Even if cheap to disseminate existing information, production of new
information requires costly investments (example: US has capability for
collecting intelligence that dwarfs those of other nations)
 First movers often the creator of standards/architecture of information
systems (example: use of English language on the Internet)
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Off-the-shelf commercial availability of what used to be costly military
technologies benefits small states and non-state actors, while increasing
the vulnerability of large states (example: terrorism)
 Issue of credibility: low cost of transmitting data means the ability to
transmit it is much less important than it used to be, but the ability to
filter information is more so  increasing importance to transnational
networks of like-minded experts
 Democratic advantage: societies familiar with free exchange of
information, more transparency
This doesn’t really give us a definition of globalization though, so what is it?
o Held and McGrew (1998, 2000)
 Globalization denotes the expanding scale, growing magnitude, speeding up,
and deepening impact of interregional flows and patterns of social interaction
 Definitions differ based material, spatio-temporal, and cognitive aspects
 Material: increasing material flows of people, capital, trade
 Spatio-temporal: shift in spatial reach of social action and organizations
toward the inter-regional/continental scale
 Cognitive: changing public perceptions of shrinking time and space
 Contemporary globalization does share much in common with past phases, but
it is distinguished by unique spatio-temporal and organizational attributes and
its unique challenge to the Westphalian principle of state sovereignty
 There are multiple types of globalization: economic, political, and military
 Some scholars are “hyper-globalizers” and others are “skeptics” – both of these
positions are too extreme – while regional and global interaction networks are
strengthening, they have multiple and variable impacts across different locales
 Globalization is NOT a homogenizing force – the impact of globalization
is mediated by a state’s position in global, political, military, and
economic hierarchies, as well as its domestic economy and politics
 But, there are “overlapping communities of fate” – a state of affairs in
which the fortune and prospects of individual political communities are
increasingly bound together (growth in trans-border issues like
terrorism or financial crises erodes clear-cut distinctions between
domestic and foreign affairs)
Setting up the big debate: globalization and national policy autonomy/convergence v.
divergence
o Garrett (1998): market integration is thought to affect national policy autonomy
through three basic mechanisms:
 Trade competitiveness pressures – big government is by definition
uncompetitive; government spending crowds out private investment, is less
efficient than market allocations, and cushions market disciplines on prices and
wages; in turn, spending must be funded either by borrowing or by higher taxes;
taxes cut into firms’ profits and depress entrepreneurial activity; government
borrowing increases interest rates; as a result of these effects, output and
employment suffer from public sector expansion; since no government can
afford these consequences, trade competition must result in a rolling back of
the public economy
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Multinationalization of production – focus on costs to business of interventionist
government; firms with production facilities in more than one country can
evade these costs by exiting the national economy; governments must thus
embrace the free market if they are to compete for the investment and jobs
provided by multinational firms
 Integration of financial markets – traders operating twenty-four hours a day can
move mind-boggling amounts of money around the globe more or less
instantaneously; governments are held ransom by the markets, the price is high,
and punishment for noncompliance is swift
 Liberalism – core proposition is that liberalization of trade is good for all
segments of society
 “Embedded liberalism” (Ruggie (1982)) – short-run political dynamics of
exposure are different; openness can increase social dislocation and
inequality and thus increase political pressure to dampen these effects
(Bretton Woods did this by combining fixed exchange rates, promoting
trade, with capital controls, giving governments autonomy, which
turned into welfare provision – “Keynesian welfare state” – in order to
support those adversely affected by market risk)
o Distinctive feature: short-run political dynamics of exposure to
trade are very different than long-run (assumption that in long
run, liberalization good for all society)
 This compromise is no longer viable due to the heightened mobility of
productive and financial capital and decline on restrictions on international flow
– essentially, the ability of government to deliver on its side of the embedded
liberalism compromise has been drastically reduced
 This view is essentially that a huge leap in exit threats has tilted the
balance of power strongly in favor of the market over politics at national
level
What is this argument? Globalization erodes national sovereignty and the ability of governments
to effectively manage (“race to the bottom”)
o Ohmae (1993)
 “Borderless world” – differences between countries matter less
 Economic activity has become global  less susceptible to state intervention
 Logic of market competition has caused economic processes to transcend
national circumstances (TNCs)
o Sabel (1989)
 Globalization has forced the contracting out of production and labor to
specialized local networks based on trust and mutual dependence, rather than
contract
 “Flexible specialization” – increases importance of local networks that can
hyper-specialize, which weakens the importance of national governments or
entities (example: Silicon Valley)
o Keohane and Milner (1996)
 Uses “internationalization” construct — underlying changes in transactions
costs that produce observable flows of goods, services, and capital
 Propositions about internationalization and domestic politics:
 As internationalization progresses, the tradeables sector will grow
relative to non-tradeables, so the economy will become more sensitive
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to international price signals; external shocks make economy more
vulnerable, so should expect major domestic policy reforms
 But, internationalization will undermine autonomy and efficacy of
governmental macroeconomic policy (will be more constraining for leftwing than right-wing governments)
o Sees capital mobility as gaining more political power than labor
 Domestic institutions can try to resist internationalization:
 Block relative price signals from international economy from entering
domestic economy
 Freeze coalitions/policies by making costs of changing them very high
o Strange (1996)
 Globalization and technological change are diminishing state autonomy because
states have trouble controlling the highly mobile assets in the new economy like
capital, information, and energy
 This means that states are losing authority in part to non-state actors like TNCs,
but also to impersonal markets (some fundamental responsibilities of the state
are not being exercised by anyone – “ungovernance”)
 Territoriality is neither the sole source of political power and authority nor a
critical factor determining the prosperity of a national society; there has been a
shift from competition over territory to competition over global markets
o Rodrik (1997)
 Argues that globalization is incompatible with domestic stability.
 Tensions:
 Among groups: group asymmetries exacerbated by reduced barriers to
trade and investment; workers bargaining power erodes
 Among/within nations: domestic norms/institutions are questioned
since the nations are trying to compete for the same thing; different
development models make this difficult
 Within nations: difficult for governments to provide social insurance 
“race to the bottom” (declining tax revenues are a result of
governments having to lower taxes to retain MNCs within their borders)
 Need: systemic-level social insurance
 Governments can no longer maintain welfare state-progressive taxation
mix; future of welfare state can only be secured by shifting tax burden
from mobile to immobile asset holders (which stunts redistributive
effects)
Is this argument correct? Another option: globalization does NOT erode national sovereignty and
the ability of governments to effectively manage (there isn’t a “race to the bottom”)
o Ruggie (1982) (follows Polanyi’s “double movement” of economic liberalism and social
protection)
 “embedded liberalism” – power is necessary to establish regimes, but the
content of the regimes are determined also by social purpose/norms – this
fusion “plays a mediating role, by providing a permissive environment for the
emergence of specific international economic transactions”
 After WWII, compromise characterized by multilateralism, predicted upon
domestic interventionism
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The industrial world shared set of social objectives – namely preserving
domestic stability (full employment and social stability) – and this
combined with US power accounts for the formation of embedded
liberal institutions
o These institutions were made at the expense of the third or
non-industrial world
 After 1971, the US declined, but the normative framework of embedded
liberalism remained
 Examples: shift from fixed to floating rates of exchange; lower tariffs
combined with domestic safeguards and negotiated export restraints
o So, national politics and global markets can actually reinforce
one another
o Vogel and Kagan (2002)
 “race to the top” (toward stringency)
 Under certain circumstances, integration can lead to the strengthening of
consumer and environmental standards
 Example: “California effect” of the diffusion of higher regulatory
standards and practices
 Market mechanisms for “trading up”:
 Firms that want access to aid markets must meet standards of those
markets
 Once these firms adjust to meet these higher production costs, they
lobby for domestic reform or use these as competitive advantage in
their home market
o There are thus institutional pressures from international
community and trans-national advocacy groups that can lead to
changes in and diffusion of norms
o Garrett (1998)
 Markets may not be completely global, but have “globalized”
 Globalization constraints on policy choice are not pervasive
 OECD countries (up to mid-1990s) – industrial countries are NOT
similarly integrated into most international markets (pace of
globalization varies); fiscal policies (government spending or changes in
government spending) have NOT converged; NOT a race to the bottom
 Market integration is more constraining than trade or
multinationalization of production – but still, it has not only increased
the exit options of producers and investors, it has also heightened
feelings of economic insecurity among broader segments of society,
which has given politicians incentives for wealth redistribution
 Although there are costs for an interventionist government, numerous
government programs generate economic benefits attractive to mobile
finance and production; this has the effect of reducing inequality, which
leads to an increase in social stability, thus stimulating growth
An addition to option two: helps/hurts national economies differentially
o Marx/Lenin: colonial expansion of great European powers in the late 19th and early 20th
centuries led to exploitation of underdeveloped regions
o Wallerstein (1974)
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o
o
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Traces the development of the European world-economy, a global capitalist
system centered in Western Europe and divided into the core, semi-periphery,
and periphery; begins in the “long 16th century” and expands to cover the globe;
the three “zones” are connected by “world market trade” in bulk commodities
 A country’s ability to modernize depends on its role in the world economy;
whereas the core countries are typically on a trajectory toward democracy and
increased prosperity (strong states), those in the periphery tend toward
authoritarian governments and economic stagnation (weak states)
 The world-economy rewards zones differently – surplus flows
disproportionately to the core areas
o Once empire proved unsustainable and groundwork laid for
modern world-economy, it became inevitable that someone
would fill each of the system’s various roles
o This is because the world-economy operates as a coherent
system; in the global division of labor, the periphery produces
lower-ranking goods, for which labor is less well rewarded than
for the higher-ranking goods in the core; the goods produced in
the periphery tend to be daily-need goods, making the core
dependent on periphery for its existence
Williamson (1997)
 Effects of globalization across time are the same: a rise in inequality in rich
countries and a fall in inequality in poor countries
 Mexico and the US: unskilled workers from poor countries emigrate to wealthy
countries, thus flooding the rich country’s labor market at the bottom
 US: unskilled wages lowered relative to skilled wages and white collar
incomes, thus increasing labor inequality
 Mexico: unskilled labor, once superfluous and flooding the market, is
fleeing, thus decreasing labor inequality
 These inequality trends were in part responsible for rich industrialized countries’
interwar retreat from globalization
Hall and Soskice (2001)
 National differences persist and are even reinforced by globalization
 “varieties of capitalism”
 Liberal market economies -- solve the problem of production
coordination through market or hierarchy solutions
 Coordinated market economies – solve the problem of production
coordination through non-market means
o These economies have different institutional comparative
advantages, which means firms will locate different types of
production in each economy ( international specialization)
Scott (2001)
 “Washington Consensus” clearly wrong – free markets do not bring about
economic convergence, so one-size-fits-all policy doesn’t work
 Neoclassical theory reminder: poor countries grow faster than rich ones
in free global market; capital from rich in search of cheap labor flows to
poorer economies and labor migrates from low-income areas toward
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those with higher wages  labor and capital costs, and eventually
income, converge
 This might work with US and EU – both enjoy labor and capital mobility
and free internal trade – but the rest of the world doesn’t fit pattern
 Income gap between rich and poor has been growing for more than 200 years,
but improved global communications have led to an increased awareness
among the poor of income inequalities and heightened the pressure to
immigrate to richer countries; in response, industrialized nations have erected
higher barriers against immigration; this immobility eliminates a potential
source of domestic pressure on ineffectual governments, facilitating their
survival; this makes the world economy more like a “gated community” than a
“global village”
 Causes:
 Rich countries insist on barriers to immigration and agricultural imports
 Poor nations unable to attract much foreign capital due to their own
government failings; primary commodities are traditional advantages
 “one country, two systems”: uses US traditional divide of North/South as a
model for understanding developing countries; Italy’s North/South divide (while
overall Italian incomes converging toward EU, Mezzogiorno incomes diverging,
despite decades of subsides from Rome and the EU  high public-sector
employment, patronage, corruption)
 Point: have to get institutions right and need country-by-country approach
Specific types of globalization? Economic – trade globalization
o Basic theories/models:
 Mundell-Fleming (“unholy trinity”) – a country cannot simultaneously have (1)
fixed exchange rates (price stability), (2) capital mobility (openness to global
capital), and (3) autonomous monetary policy (ability to fix domestic interest
rates to control inflation); the idea is that, under fixed exchange rates, increases
in capital mobility render monetary policy less and less useful as a domestic
tool; rather, it simply becomes a tool for maintaining the exchange rate
 Heckscher-Ohlin Theory (factor proportions) – assumes perfect competition and
factor mobility within trading countries, but immobility between countries;
equal demand conditions, zero transport costs, constant returns to scale, fixed
technology, and that every product can be unambiguously defined in terms of
factor intensity; given these conditions, trade patterns are determined by the
fact that countries have different relative factor inputs; each country will export
those products that require a great deal of its relatively abundant factor of
production, and import those that require inputs scarce in that country
 Stolper-Samuelson Theorem -- in a two factor world with complete mobility of
factors within a country, trade liberalization will lower the real income of one
factor of production (the scarce factor) and increase the real income of the
other (the abundant factor); under demanding assumptions, wage rates and
returns to capital will each equalize across trading countries (known as “factor
price equalization”)
 Ricardo-Viner Model – factors of production are industry-specific even in the
long run, so trade liberalization will benefit all factors in the export industry but
hurt all factors in the import-competing industry

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“Specific-factors approach” – economy is organized into sectors to which factors
are specific, along with factors that can move freely from activity to activity; the
result is that changes in the prices of goods have their principal effects on the
specific factors, with collateral (ambiguous) effects on the mobile factors
Specific types of globalization? Economic – financial globalization/internationalization
o Frieden (1991)
 Framework for analyzing international capital mobility – this mobility is often
seen as a fundamental change in the international economy
 There is greater international mobility of financial assets (capital), more modest
international mobility of other assets (equity, for example, is more
geographically specific), and markets for firm- and sector-specific capital are
quite nationally segmented, showing the continued importance of unexpected
exchange rate movements
 Financial capital mobility has little effect on most sector-specific policies, but
integration of financial markets has significant effects on the effectiveness and
differential distributional impact of national macro-economic policies
 World has changed from one in which national macroeconomic policy
operated primarily via interest rates to one in which policy operates
primarily via exchange rates
 “Specific-factors approach”
 Over the long run, international financial integration tends to favor
capital over labor, especially in developed countries; in the shorter run,
which is more relevant to politics and policies, the issue is more
complex: in the developed world, financial integration favors capitalists
with mobile or diversified assets and disfavors those with assets tied to
specific locations and activities such as manufacturing or farming.
 Useful for analysis of international finance:
o Emphasizes political relevance of short-term fluctuations in the
returns to different sorts of economic activity
o Assumes most people and investments are “caught” (or stuck,
meaning without high job mobility) in their current activity to
one degree or another
o Some factors may be mobile (unskilled labor), while others are
specific (skilled labor)
 Note: sectoral approach as contrasted to class (Marx); here there is competition
among various sectors of the economy, not competition among classes
o Cohen (1996)
 Financial globalization started in the late 1950s when private lending and
investment again gathered momentum
 Possible explanations:
 Realist model: Determining role of policy rivalry among governments in
an insecure world, each calculating how best to use its influence and
capabilities to promote state interest
o Critique: reversibility appears to be logical corollary – does this
make sense? Which “face” (James and Lake 1989) of hegemony
is at work here?
 Liberal model: Powerful impacts of competition and innovation in
financial marketplace; advances in communication/information
o
o
technologies  decreased barriers to market integration/free flow of
capital (neoclassical economics)
o Critique: approach often links globalization outcome with its
defining characteristics  tautology
 Pluralist model: Role of domestic politics and institutions in driving
international developments
 Cognitive model: Role of belief systems and epistemic communities as
catalysts for change
 Consequences of globalization
 Macro-level – implications for aggregate economic performance and
effectiveness of national stabilization policies
o “unholy trinity” (Mundell-Fleming)
o Financial globalization places a constraint on sovereign states
 Micro-level – implications for domestic distribution and the role of
public policy in structuring private activity
o Financial globalization enhances the leverage of investor
interests by reducing barriers to exit
States are assumed to have a key role in financial globalization, but scholars posit
different policy explanations and causes – autonomy debate within one aspect of
economic globalization:
 Convergence/lack of autonomy
 Helleiner (1994): at the systemic level, "competitive deregulation" by
governments maneuvering unilaterally to attract the business of mobile
financial traders was reinforced as early as the 1960s by policy initiatives from
the two leading financial powers of the day, the United States and Britain, both
with a strong interest in promoting a more open international order; at the
cognitive level, an ideological shift from postwar Keynesianism to a neoclassical
or neoliberal policy framework gained strength from the preexistence of a
sophisticated epistemic community of central bankers based around the Bank
for International Settlements
 Divergence/autonomy
 Sobel (1994): process is best explained by purely domestic considerations-competition between organized interests within national political economies
has spilled over to affect the international environment; focusing specifically on
recent developments in the securities markets of Britain, Japan, and the United
States, rejects structural or ideational interpretations of globalization, which he
labels "outside-in" explanations: "In these explanations, the primary stimulus
motivating change arises outside the domestic political economy, but compels
changes that impact the domestic political economy"; prefers instead an
alternative "inside-out" explanation, which he defends with extensive evidence
of persistent national distinctions and "home bias" in bond and equity markets;
this incomplete convergence shows the importance of domestic policy
Financial globalization has put governments on the defensive, but scholars posit
different consequences of this defensive view – autonomy debate again:
 Convergence/lack of autonomy
 Kurzer (1993): sees rather little scope for effective state responses to global
finance; comparative study examines the fate in the 1980s of tripartite
distributive arrangements between business, labor, and government in four
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small European democracies: Austria, Belgium, the Netherlands, and Sweden; in
all four countries, traditional policies of "social concertation" have recently been
abandoned. The timing of these changes varied across the countries, which may
be explained by differences in such factors as business preferences,
administrative rulings, and the historical stance of foreign economic policies, but
the overall outcome ultimately was the same and may be attributed to financial
globalization: "As business and finance became more mobile, their power
resources increased, and those of labor decreased. . . . [T]he greater mobility of
capital and deepening financial integration corroded social concertation";
"governments have lost the ability to carve out national economic strategies
and to sustain social accords"
 Divergence/autonomy
 Kapstein (1994): surveys regulatory responses to the internationalization of
commercial banking over the postwar period (prudential and supervisory
agreements negotiated by major central banks); identifies the formula
"international cooperation based on home country control," which has enabled
governments to mount an effective response to the challenges of financial
globalization; though imperfections remain, a workable framework for
governing global financial markets has been created and may suggest a "generic
policy solution" to the conflicting demands of systemic and societal forces in
other issue-areas as well: "International cooperation based on home country
control provides a way for states to enjoy the benefits of interdependence while
maintaining national responsibility for the sector in question"
 Somewhere in between
 Goodman (1992): comparative analysis of central banking practices in three big
West European economies: France, Germany, and Italy; primary concern is with
the role played by institutional differences, particularly differences in the degree
of central-bank independence that "govern the extent to which domestic
political pressures influence national monetary policy"; assumes context of
deepening financial interdependence; the globalization of finance drives states
voluntarily to limit their own monetary autonomy by means of cooperation (in
Europe, up to and including the possible creation of a full monetary union);
authority may be lost at the national level but might be regained through a
convergence of policies at a higher level
What about non-market, non-state actors as facilitators of globalization? Transnational actors
(TNAs) – do they impinge on state authority and how?
o [Notes on these in constructivism outline]
 Risse-Kappen (1996) – NATO emergence, liberal states form pacific federations
 Finnemore and Sikkink (1998) – “life cycle of norms”
 Keck and Sikkink (1998) – transnational advocacy networks, human
rights/environment, Brazil/Malaysia
 Price (1998) – TNAs and land mines
 Acharya (2004) – norm localization in Asian regionalism
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Is it even useful to think about globalization? Is regionalization a better concept?
o Zysman (1996)
 “global economy is a myth” – process of regionalization, not globalization
o Weiss (1998)
 More appropriate label for the phenomenon is “inter-nation-alization”
o Hirst and Thompson (2000)
 Genuinely transnational companies rare – most are nationally based and trade
multinationally, but there seems to be no major tendency toward the growth of
truly international companies
 FDI highly concentrated among AICs and Third World remains marginal in both
investment and trade (minus a few NICs)
 World economy is not global – trade, investment, and financial flows
concentrated in Triad of Europe, Japan, and North America
 These major powers have the capacity, especially if they coordinate policy, to
exert governance pressures over financial markets
 So, global markets are NOT beyond regulation and control – we haven’t
seen true globalization
o Castells (1993)
 There is a new division of labor in the global economy stemming from the
information-based production characterized by interdependence,
regionalization, increasing diversification within regions, selective inclusiveness,
exclusionary segmentation
 But there are limits to the globalization thesis:
 The global economy is actually organized around three regions: North
America, European Union, and Asia-Pacific; around this “triangle of
wealth, power, and technology,” the rest of the world is organized
hierarchically and asymmetrically, in an interdependent web
o Regionalization is thus an attribute of the global economy
o Mansfield and Milner (1999)
 Four waves of regionalism
 Progressive bilateralism – starting second half of 19th century, Europe –
intra-European trade rose dramatically; functioned as a single market by
20th century – customs union in various states (1850s/1860s); first
decade 20th century, UK had bilateral arrangements with 46 states
 Highly preferential arrangements – soon after WWI ended, second wave
with highly preferential regional arrangements, discriminatory,
protectionist, “beggar-thy-neighbor” policies, typically among sovereign
states; examples: Hungary, Romania, Yugoslavia, and Bulgaria each
negotiated tariff preferences on their agricultural trade with various
European countries, US with Latin American countries
 Regional concentration waves – regional concentration of trade flows
generally has increased since the end of WWII (due much to EC); has
particularly increased among members of a PTA (not merely in same
geographic region), but in two waves:
o 1950s-1970s (wave one): establishment of EEC, EFTA, CMEA,
regional trade blocs among developing countries (backdrop of
Cold War)
o






1990s (wave two): post-Cold War, US actively promoting and
participating in process, high levels of economic
interdependence, willingness by major players to mediate trade
disputes, and multilateral framework (GATT/WTO)
Definition of regionalism:
 Region often defined as a group of countries located in the same
geographically specified area and/or sharing cultural, economic,
linguistic, or political ties
o Problems: is Asia-Pacific one region or two? How big is the
European region?
 Fishlow and Haggard (1992): regionalization v. regionalism
o Regionalization – economic process whereby economic flows
grow more rapidly among a given group of states in the same
region than between these states and those located elsewhere
o Regionalism – political process characterized by economic policy
cooperation and coordination among countries (so commercial
regionalism driven largely by spread of preferential trading
arrangements (PTAs))
PTAs
 Liberalize commerce among members while discriminating against third
parties
 Viner (1950): trade-creating v. trade-diverting
o Trade-creating – one member of customs union newly imports
from another something that it formerly did not import at all
(high-cost  low-cost)
o Trade-diverting – one member of customs union newly imports
from another something it formerly imported from third
country, because that was the cheapest possible source (lowcost  high-cost)
 A custom union’s static welfare effects on members and
the world as a whole depends on whether it creates
more trade than it diverts (though effects debatable)
Regional trade agreements can influence welfare of members by allowing firms
to realize economies of scale, but static welfare implications uncertain
Regional economic arrangements might bolster multilateral openness
 Can induce members to undertake/consolidate economic reforms
 Summers (1991), Krugman (1993): regional institutions reduce the
number of actors engaged in multilateral negotiations, thereby muting
problems of bargaining and collective action
Then again, it might not
 Bond and Syropoulos (1996): formation of customs unions may render
multilateral trade liberalization more difficult by undercutting
multilateral enforcement
Or, it can be qualified
 Bagwell and Staiger (1997): when the multilateral system is working
poorly, preferential agreements can have their most desirable effects
on the multilateral system


Domestic politics and regionalism
 Societal factors
o Grossman and Helpman (1995): whether a country chooses to
enter a regional trade agreement is determined by how much
influence different interest groups exert and how much the
government is concerned about voters’ welfare; political
viability of PTA often depends on the amount of discrimination
it yields; agreements that divert trade will benefit certain
interest groups while creating costs borne by the populace at
large; if these groups have more political clout than other
segments of society, then a PTA that is trade diverting stands a
better chance of being established than one that is trade
creating; by excluding some sectors from a PTA, governments
can increase domestic support for it, thus helping to explain
why many PTAs do not cover politically sensitive industries
(example: EEC’s exclusion of agriculture)
 Domestic institutions
o PTAs can be commitment devices
 Eichengreen and Frankel (1995): PTAs can be made by
policymakers who prefer liberalized trade, but face
domestic obstacles; Columbia and Venezuela (1991)
turned the previously dead Andean Pact into a
successful FTA; this was a politically easy way to
dismantle protectionist barriers to an extent that their
domestic legislatures would never have allowed had the
policy not be pursued in a regional context
 Other example: if governments expect domestic
opposition to liberal economic reforms, can
enter a PTA to bind themselves to these
changes (Mexico entering NAFTA)
International politics and regionalism – power and conflict
 Hegemonic stability theory (Kindleberger 1973, Gilpin 1975, Krasner
1976) – discriminatory trade arrangements are outgrowths of the
economic instability fostered by the lack or decline of a hegemon (which
can provide economic stability); current wave of regionalism triggered
or accelerated by US decision to pursue regional arrangement in early
1980s when its economic power waned and multilateral trade
negotiations stalled; erosion of US hegemony over past 50 years has
stimulated rise in number of PTAs and states entering them
o Gilpin (1975): benevolent and malign strains of regionalism; on
the one hand, regionalism can promote international economic
stability, multilateral liberalization, and peace; on the other, it
can have a mercantilist tenor, degrading economic welfare, and
fostering interstate conflict
 Since WWII, regionalism has been relatively benign
o Gowa (1994): “security externalities” imply that since PTAs
liberalize trade among members, arrangements are especially
likely to form among allies (bolsters political-military capacity)

-
Regime theory (Keohane 1984, Snidal 1985) – global openness can be
maintained in the face of declining or absence of hegemony if a small
group of leading countries collaborates to support the trading system;
erosion of US hegemony may have stimulated creation/expansion of
PTAs because leading economic powers felt these arrangements would
help them manage international economy
 International politics and regionalism – institutions and strategic interaction
 Most contemporary PTAs established under auspices of the GATT/WTO,
which has attempted to dampen trade diversion by limiting members’
ability to discriminate against third parties; limited success because
many arrangements by less-developed members have been highly
protectionist
 GATT attempts to regulate formation of PTAs
o Article XXIV of the GATT: PTAs must eliminate internal trade
barriers and must not increase the average level of members’
external tariffs (but can have trade diversion)
 GATT made efforts to manage strategic interdependence among PTAs
o Preferential agreements have formed in reaction to one
another (EFTA in response to EEC), but not to obtain MFN
treatment or as the product of mercantilist policies
 Why? rival blocs want to bolster competitiveness and
give more bargaining power than constituent members
alone
 Haggard (1997): CEFTA hoped formation would bolster
ability to negotiate entrance into EC/EU
 Variations among regional institutions
 Downs, et al. (1998): depth of integration varies; deeper integration
more easily attained if states share interest in economic liberalization
and easier with fewer states due to collective action problems; more
effective to create smaller PTA composed of states with preference for
liberalizing economic relations and then take on additional members
incrementally, just as the EC/EU did
 Katzenstein (1997): economic, political, cultural heterogeneity varies;
Asia’s commitment to “open regionalism,” implying a desire for nondiscriminatory trade practices and a willingness to accept new
members)
Empirical examples: East Asia and EU
These studies relate to the importance of the presence of a hegemon/East Asian regionalism.
o Pempel (2000)
 Most national economies of Asia have become increasingly tied together
through economic integration involving primarily FDI, trade, bank loans, and
other capital movements, but regional closeness was only partially paralleled by
closer political integration
 Two stages of growing economic integration in Asia:
 First three decades following WWII: trade and aid; bilateral linkages
between US and/or Japan and other economies; this was tied to military
strategic alliances (not economic) and government-led
o
-
Didn’t enhance intra-Asian trade (“regionalism” only in the
sense that a number of countries had similar bilateral economic
links to Japan and the US)
o Little institutionalization (though ASEAN formed in 1967)
 Following breakdown of Bretton Woods in 1971: FDI, portfolio
purchases, and bank loans; multilateral (including South Korea, Taiwan,
Hong Kong, and China)
o Japanese capital initially became most important – yen
appreciated, costs of land/labor elsewhere fell  outflow of
Japanese capital ( investment expansion + financial
institutions’ expansion)
 There has been some slight increase in institutionalization (non-official
institutions like PECC, for example), but any Asian economic success has relied
heavily on exports to markets of North America – highly dependent on a
regionalism that is open
Can we link globalization/regionalization at an even lower level? Sub-multilateral level
o Aggarwal and Koo (2005)
 East Asian international economic integration: many countries, including Japan,
China, South Korea, ASEAN members, and Taiwan are in WTO (formerly GATT)
 East Asian regional economic integration: lacks significant formal
institutionalization (even ASEAN avoids commitment to the elimination of tariffs
and other trade barriers), but impressive in a practical sense – there is soaring
intra-regional trade and investment flows
 It is just an informal, network-style integration instead
 Because this has come under stress, though, a growing number of East Asian
countries have begun the pursuit of greater institutionalization at the submultilateral level, actively weaving a web of preferential arrangements with
countries both within and outside the region
 Examples: Japan-Singapore Economic Partnership Agreement (2002),
China signed framework free trade agreement with neighbors in
Southeast Asia (2003)
 Use institutional-bargaining game approach – there are many types of trade
governance measures: unilateral, bilateral, minilateral, multilateral
 Following the crisis in the late 1990s, one option was to secure preferential
access and create a more diversified export market; tighter institutionalization
(wanted to pursue club goods, not public goods) – rather than looselystructured production markets – might be a better commitment mechanism for
providing economic security  PTAs
 Many wanted China as FTA partner; crisis changed domestic pressures
(challenges to regime legitimacy/political turnover); many East Asian
trade experts are now part of an “epistemic community” which shares
the view that preferential arrangements can be trade-enhancing and
serve a similar purpose as multilateral trade liberalization; growing need
for an “insurance policy” to realize free trade sub-multilaterally when
multilateral trade liberalization is stalled or proceeding slowly (and this
often goes beyond trade in goods to include things like services and
investment)

o
-
Note: some arrangements potentially incompatible with WTO because
they deliberately exclude some sensitive sectors
Pempel (2010)
 Since turn of century, substantial increase in formal linkages among East Asian
governments
 Not neo-realist prediction of anarchy following end of Cold War
 Not neo-liberal idea that institutions automatically reduce national
competition in favor of coordination
 Not constructivist idea that there is a march toward a shared vision of
East Asian community
 The large number of new institutional ties reflects a sequence of disjointed East
Asian efforts to deal with discrete changes in the global and regional balance of
power (especially as response to financial crisis in late 1990s); institutional
responses typically ad hoc, often contradictory, but largely pragmatic;
collectively, created a set of regional institutions that allow East Asian states to
deal with commonly perceived threats, but many are distinctive and states
identify interests/challenges differently; regional bodies reflect the
preeminence and driving force of individual state strategies rather than any
collective predisposition toward regionalism/multilateralism
 Common “enemy” against which economic institutions are directed is
exogenous force of global capitalism
 Offered soft balancing against worst excesses of unmediated
globalization even as individual governments took steps to self-insure by
accumulating large war chests of currency reserves
o ASEAN+3 (APT, extra three are South Korea, Japan, China) –
began in mid-1995; in 2000, initiated Chiang Mai Initiative,
expanded currency swaps, initiated regional surveillance
mechanism; idea to reduce Asian dependence on US dollar for
financial reserves, currency baskets, international transactions
(example: through regional bond markets)
 Regional, but not anti-global; no longer pan-Pacific (no
US influence), focused on finance, not trade
 Security bodies directed at regionally endogenous security problems of a much
more particularistic character (no common enemy; example: Six Party Talks – no
comprehensive membership, directed against intraregional not exogenous
threats, and particularistic in the security problem – DPRK’s nuclear activities)
EU – the following two studies of member-state constraints in the EU link nicely to the debate
about globalization effects – they suggest that member-states have to give up some of their
national autonomy in these regional agreements
o Garrett (1992)
 By focusing on the functional aspects of the evolution of cooperation and
arguing that arrangements are generated to solve common problems, analysts
downplay the distributional conflicts between states and the impact of power
asymmetries in conflict resolution
 EC shared common goal of increasing competitiveness of European goods and
services in global markets, but substantial differences in national preferences
(Thatcher wanted laissez-faire trade regime, France and Germany were similar
in that they wanted mutual recognition of standards/products but not sweeping
o
deregulation of national political economic regimes within Europe, poorer
Southern Europe wanted more interventionist market with developmental
assistance)
 Institutions supporting internal market are not just apolitical providers of
information – while national vetoes obtain in most international regimes, a
qualified majority (QMV) of states in the Council of Ministers may impose its will
on other members of the EC (this decision favored France/Germany initially)
 Commission has agenda-setting power; EP has ability to veto directives
that as many as all but one of the council members approve because it’s
done unanimously or ability to amend
 So, Commission and Parliament should be able to pass internal market
directives that accord closely with its own preferences (though not
much evidence it has done this)
 EC law considered to have supremacy over national laws and to have “direct
effect” in domestic jurisdictions
 Chose political and economic institutions to govern internal market (not
national states)
 EC laws have effectively constrained the behavior of members even in
areas that impinge directly on the traditional authority of national
governments
Pierson (1996)
 IR, “intergovernmentalist perspective” of European integration – centrality of
member-state sovereignty; instrumentality of institutions (reduce transaction
costs); centrality of intergovernmental bargains
 Ordinary diplomacy under conditions creating unusual opportunities for
providing collective goods through highly institutionalized exchange
(forum for interstate bargaining)
 But, focus only on Single European Act and Maastricht Treaty, ignoring
smaller bargains
 IR, “neofunctionalist perspective”– spillover processes and the autonomous
actions of supranational actors like the Commission contribute to European
policy making (example: Commission and EP set agenda)
 But, this attributes greater autonomy to supranational actors than they
actually have and fails to account for why member-state threats are not
always credible
 Comparative, see EC as a quasi-federal, multilevel, or multi-tiered political
system, but this view tends to describe the system rather than explain it
 Comparative, better alternative: historical institutionalism
 Temporal gaps argument: Long-term institutional consequences are
often the by-products of actions taken for short-term reasons (policymakers have high discount rates; focus on short-term outcomes)
 Unintended consequences likely to be widespread, especially because
of high issue density in the EU  problem of (1) overload, which gives
time constraints, scarcities of information, and the need to delegate
decisions to experts, which in turn leads to gaps in member-state
control; problem of (2) spillover – tendency of tasks adopted to have
importance consequences for realms outside those originally intended

-
Member-state preferences shift over time (because national
governments come and go), but the EC focuses on core concerns of
traditional domestic politics  gaps in member-state control
 IR response: competition and learning over time will fix these gaps, but the
question is, once gaps appear and are identified, how easy is it for the principals
(member-states) to gain control? Not easy – member-states are constrained!
 Resistance of EC institutional actors
 Institutional obstacles to reform within the EC (example: a Treaty
revision requires unanimous member-state agreement, plus ratification
by national parliaments and (in some cases) electorates)
 Sunk costs associated with previous actions (locked in to acquis
communautaire)
 Examples: gender equality  extensive national reforms of social security law
and corporate employment practices; workplace health and safety  higher
standards than any member-state had on its own
This links regionalism and globalism – EU trans-regional and inter-regional trading
o Aggarwal and Fogarty (2004)
 “regionalism” typically seen as geographically-concentrated minilateral accords
 “interregionalism” – pursuit of formalized intergovernmental relations with
respect to commercial relationships across distinct regions
 Types: pure (links two free trade areas or customs unions, EUMercosur), hybrid (customs union negotiates with group of countries
from another region, but not part of customs union or FTA – Lome
Agreement), trans-regionalism (two regions where neither is a grouping
– APEC)
o These arrangements can be treated as international regimes
o Look at strength, nature (liberal/protectionist, issue scope,
development emphasis), and EU’s commercial treatment of the
counterpart region (uniform or different rules for different
countries)
 What affects EU trade strategies? Possibilities:
 Interest groups (relative influence)
 Bureaucracies (European institutions like the Commission, EP, Council
try to maximize their own influence)
 International systemic constraints and opportunities (constraints can be
from a need to respond to external threats, namely US hegemony, or
need to nest within broader institutions, the broader economic system
and then the even broader security system)
 Need to forge a common European identity and interests (and by
formalizing transactions between Europe as a whole and other
recognizable regions would serve this purpose)
 Some examples (not including EU-North America, since these are mainly
bilateral):
 EU-Africa, the Caribbean, and the Pacific (1975)
 Lome Convention – govern commercial relations between European
countries and many former colonies; strongly institutionalized European
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support for and preferential treatment of these countries’ industries
and exports
o Attempt at institutionalized interregionalism (Lome provisions
were “contractual” in nature)
 EU-CEE (1990)
 Dynamics of regionalism and interregionalism most intertwined;
initially, interregional – poor, fragile new democracies could not be
immediately brought into the Union, but EU members encouraged CEE
to pursue own sub-regional groupings to promote stability (minus the
Balkans): Visegrad group (Poland, Czechoslovakia, Hungary), Baltic trio
(Lithuania, Latvia, Estonia), and Commonwealth of Independent States
(former Soviet republics, CIS)
o Initial interregionalism  bilateralism in Visegrad and Baltic
trio; for CIS, futures were less directed toward gaining EU
membership, so maintained a stronger tendency toward
interregionalism
 EU-Southern Mediterranean (1995)
 Barcelona Declaration – established 2010 as goal for establishing a freetrade area with the Med12 countries (mainly MENA); objectives were to
accelerate sustainable socioeconomic development, improve living
conditions, and encourage regional cooperation/integration (with
increased financial assistance)
o EuroMed Group – EU’s treatment has been mostly nonuniform
(EU members/hopefuls = Malta, Cyprus, and Turkey have
followed Copenhagen Criteria, but not others)
 Weakest interregional regime of these cases
 EU-South America (1995)
 EU-Mercosur Interregional Framework Cooperation Agreement –
interregional free trade area was primary goal, but fairly weakly
institutionalized
o Pure-interregionalism
 EU-East Asia (1996)
 Asia-Europe Meeting (ASEM) – ASEAN + Japan, China, South Korea
(APT); broad agenda to pursue plural approach to relations (from
business to development to cultural exchanges)
o Hybrid-interregionalism
 Overall: trade within these regions has grown relative to their overall trade with
the rest of the world
[Other potentially useful literature to incorporate that is in other outlines (depending on
question): further dependency theory, development (Gerschenkron, Gourevitch)]