Chapter 4 Regional Economic and Political Integration

1
Chapter 4Regional Economic
and Political
Integration

• Dana-Nicoleta Lascu

2
Determinants of Economic and Political
Integration

• Common culture
• Shared history
• Regional proximity
• Similar level of economic development

3
Impediments to Economic and Political Integration

• Differences in culture and history
• Physical distance
• Differences in level of economic development
• Political considerations
• Concerns regarding loss of sovereignty
• A history of conflict

4

Levels of Regional Economic and/or Political
Integration and Examples of
Integration Successes
Political Union
Monetary Union
Common Market
Free Trade Agreement
General Bilateral/Multilateral Agreement
5
General Agreements Bilateral and Multilateral
Forums and Agreements

• Bilateral Agreements
• Limited to two countries
• Multilateral Forums and Agreements
• General agreements between multiple countries.
• Typically, they are industry specific
• OPEC
• NATO
• Asia-Pacific Economic Cooperation
• Commonwealth of Independent States

6
Free Trade Agreements Europe

• Countries reduce or eliminate trade barriers on
  all goods and services traded between
  them.
  
• Example
• European Free Trade Association
• - Member countries Iceland, Liechtenstein,
  Norway, and Switzerland

7
Free Trade Agreements Asia

• Association of Southeast Asian Nations (ASEAN)
• Most successful example of regional economic
  integration in Asia
  
• Member countries Brunei, Cambodia, Indonesia,
  Laos, Malaysia, Myanmar, the Philippines,
  Singapore, Thailand, and Vietnam.

8
Free Trade Agreements Americas

• North American Free Trade Agreement (NAFTA)
• Member countries United States, Canada, and
  Mexico.
  
• Free Trade Area of the Americas (FTAA)
• Member countries The 34 democratic nations of
  North, Central, and South America.
  
• Ambitious plan to create a market of 800 million
  people and an annual production worth 11
  trillion in the current decade.
  

9
Free Trade Agreements Africa

• Southern African Development Community
  (SADC)
  
• Free trade organization promoting economic
  cooperation among 14 of Africas more affluent
  countries Angola, Botswana, the Democratic
  Republic of Congo, Lesotho, Madagascar, Malawi,
  Mozambique, Namibia, Seychelles, the Republic of
  South Africa, Swaziland, Tanzania, Zambia, and
  Zimbabwe.

10
Customs Union

• Trade association that eliminates or greatly
  reduces all trade restrictions for member
  countries and also adopts common external tariffs
  on products imported from outside the area
• South African Customs Union
• Botswana, Lesotho, Namibia, and Swaziland

11
Common Market

• Establishing a common market involves
• Eliminating all tariff and non-tariff barriers to
  trade
  
• Adopting common external tariffs, and allow for
  free movement of capital and labor within the
  common market
  
• European Union reached this stage before
  establishing a monetary and political union

12
Common Market (contd.)

• Latin American Integration Association
• Member countries Argentina, Bolivia, Chile,
  Colombia, Ecuador, Mexico, Paraguay, Peru,
  Uruguay, and Venezuela.
  
• Andean Common Market
• Member countries Bolivia, Colombia, Ecuador,
  Panama, Peru, and Venezuela.
  

13
Common Market (contd.)

• Southern Cone Common Market (MERCOSUR)
• Member countries Belize, Costa Rica, Dominican
  Republic, El Salvador, Guatemala, Honduras,
  Nicaragua, and Panama.
  
• Central American Common Market
• Member countries Brazil, Argentina, Paraguay and
  Uruguay.
  
• Bolivia and Chile are members with contingencies.
  
  

14
Common Market (contd.)

• Common Market for Eastern and Southern Africa
  (COMESA)
  
• Angola, Burundi, Comoros, Democratic Republic
  of Congo, Djibouti, Egypt, Eritrea,
  Ethiopia, Kenya, Madagascar, Malawi, Mauritius,
  Namibia, Rwanda, Seychelles, Sudan, Swaziland,
  Uganda, Zambia, Zimbabwe.

15
Monetary Union

• Common monetary policy
• Unified central bank
• Single currency

16
Monetary Union, Examples

• European Monetary Union
• Also known as Euro zone, EUR-12, and Euroland
• Member countries Austria, Belgium, Finland,
  France, Germany, Greece, Ireland, Italy,
  Luxembourg, the Netherlands, Portugal, and Spain
  
• European Central Bank

17
Monetary Union, Examples (contd.)

• West African Economic and Monetary Union
• Benin, Burkina Faso, Ivory Coast, Guinea-Bissau,
  Mali, Niger, Senegal, Togo
  
• Economic Community of West African States
• Benin, Burkina Faso, Cap Verde, Ivory Coast,
  Gambia, Ghana, Guinea, Guinea-Bissau, Liberia,
  Mali, Niger, Nigeria, Senegal, Sierra Leone, and
  Togo

18
Political Union

• Highest level of integration
• Common governing bodies, legislative bodies, and
  enforcement powers
  
• Example European Union

19
European Union

• Member Countries
• Austria, Belgium, Cyprus, Czech Republic,
  Denmark, Estonia, Finland, France, Germany,
  Greece, Hungary, Ireland, Italy, Latvia,
  Lithuania, Luxembourg, Malta, the Netherlands,
  Poland, Portugal, Slovakia, Slovenia, Spain,
  Sweden, and the United Kingdom
• Candidate Countries
• Bulgaria, Croatia, Romania, and Turkey

20
Bodies of the European Union

• European Council
• The highest policy-making body, it consists of
  heads of member-countries government.
  
• European Parliament
• Consists of members elected by direct universal
  suffrage with representation allocated among
  member states based on their population
  
• Debates the policies and legislation in the
  European Union
  
• Council of Nations
• Consists of representatives from parliaments of
  member countries and acts as constitutional
  council that has the power to overrule the Court
  of Justice.

21
Bodies of the European Union (contd.)

• Council of Ministers
• The decision-making body (legislature) of the
  European Union
  
• Composed of one minister from each member
  country
  
• Passes laws based on proposals of the European
  Commission
  
• European Commission
• The executive body of the European Union.
• Subordinated to the European Council
• Consists of a president and commissioners who are
  in charge of initiating and supervising the
  execution of laws and policies.
  
• Answers to the European Parliament
• Acts only on behalf of and in the interest of the
  European Union, and not that of individual member
  states

22
Bodies of the European Union (contd.)

• European Central Bank
• Enacts the monetary policy for the countries that
  are members of the European Monetary Union
  
• Maintains price stability within the European
  Monetary Union
  
• European Court of Auditors
• In charge of controlling sound and lawful
  management of the EU budget
  
• European Court of Justice
• The European Unions equivalent of the United
  States Supreme Court.
  
• The final court of appeals
• Can overrule decisions of the national courts