Regional economic integration

Achieving the benefits of regional integration, and indeed globalization, remain a critical part of Africa’s development strategy. Following the attainment of political independence since the early 1960s, many African countries started advocating for regional integration arrangements with the principal objective of boosting potentials for economic growth through policy coordination amongst strategically located economies. A good number of studies supporting regional integration arrangements argue that regional integration promotes trade flows between member countries and thus encourages resources allocation according to the competitive advantage of a country (Piazolo, 2001; Asante, 1999; and Hitiris, 1991). It is believed that it enhances the productivity of the countries involved; induce more efficient investments which in turn create spill-over effects due to the externalties generated by exports and imports (De Rosa, 1998). Regional economic integration foster trade amongst member countries by advocating for policies of trade liberalization and systematic dismantling of trade barriers through harmonization of external tariffs, facilitation of free movement of people and co- ordination of fiscal and monetary policies.

created. To prevent this ring from breaking, strong bonds connecting the individual parts must be formed. Accordingly, the EU seeks to foster regional integration among the individual neighbouring countries, complementary to the bilateral relations. While this encompasses also political and cultural regional cooperation, this work focuses on the promotion of regional economic integration by the EU in its neighbourhood. The EU’s own starting point was economic cooperation with an overarching political motivation to prevent further violent conflicts on the European continent. Correspondingly, there is hope that successful economic cooperation can lead to the reduction of political tensions and increased cooperative behaviour also in other regions. This would also offer investment and export opportunities for European companies and contribute to the spread of EU norms and standards in the context of competition for becoming the global regulatory capital. Moreover, the EU as ‘normative power’ exports its core norms through different mechanisms, one of them being its trade policy.

The Arab Spring that is sweeping through the MENA region has created a sense of urgency in intensifying regional economic integration efforts. There are encouraging signs that new leaders are focusing on regional integration as one of several means to restoring growth, generating employment, and building more democratic and inclusive societies. For example, Tunisia recently announced its intention to reinvigorate the Arab Maghreb Union, which aims to foster cooperation among the five member countries and which had been dormant since its inception over 20 years ago. The political landscape in North Africa and even the Middle East is changing rapidly. Experience to date in the region suggests that like-minded political regimes tend to boost economic ties. The spread and strengthening of democratic institutions throughout the region is expected to spur broader and deeper political and economic integration among countries undergoing political reform. Blocks of countries with similar political orientations may intensify economic ties in response to growing uncertainties elsewhere. The recent move by the Gulf Cooperation Council (GCC) to expand membership to Jordan and Morocco is an example of this trend.

Similarly, Bekaert et al. (2013) also reveals a membership in the economic community can significantly lower interest rate differentials among countries (financial integration) and reduce the expected earnings growth rate differentials (economic integration). Besides, increasing degree of ASEAN regional economic integration initiatives (more market liberalization) may have large impact for economic stability. According to Yu et al. (2010), financial integration between economies may strengthen countries capacity to withstand shocks and improve financial development. However, higher integration may also increase the risk of financial contagion across countries, because the country member becomes more interdependent (Beine et al., 2010). From the perspective of individual investors, regional economic integration may reduce the possibilities of diversification. This fact has attracted previous studies to explore the integration of ASEAN stock markets. For instance, Ng (2000) demonstrated that stock market returns of Indonesia, Philippines, Singapore, and Thailand are closely linked to each other in the period 1993-1997, even though there is no evidence of co-integration relationship between those markets before 1990. Further evidence by Yang et al. (2003) also concluded that, correlation among Asian emerging markets is getting stronger after Asian financial crisis. In contrast, Click and Plummer, (2005), argued that the integration of ASEAN-5 (Indonesia, Malaysia, the Philippines, Singapore, and Thailand) is far beyond complete.

This research has provided support for the first, second, third, fifth and sixth hypotheses while it does not confirm the fourth hypothesis. The first, second and third hypotheses derived from theories of intergovernmentalism and collective action are confirmed. These line of thoughts can be equally applied to each member state of ASEAN. The ASEAN principle of non-interference is perceived as the predominant reason that puts ASEAN leaders into a state of political ignorance when comes to human rights issues. As the intensity and speed of integration increase, ASEAN leaders will require strenuous efforts to control the negative spillover effect from affecting the stability in the region. Thus, ASEAN should maximize its role in resolving issues for each members. The fourth hypothesis was analyzed under the theory of neoliberalism in the political economy context. There is visible income inequality gap across ASEAN member states but the income inequality gap within a country is less significant. It cannot be confirmed also partly due to the lack of credible resources. While studying regional economic integration, the development gap is often focused on the gap across countries rather than to emphasize the development gap as a result of domestic policy. Moreover, models of trade is not sufficient to justify the relations between trade, inequality, and democracy.

significant impact on agricultural exports. However, the researcher concluded notably that there is a need to create incentives for greater level of implementation of the ECOWAS agricultural policy (ECOWAP) and the ECOWAS Trade liberalization Scheme (ETLS) protocols by individual member states to enhance economic integration in the sub-region. Examining the history and motivation of regional integration in Africa, the different initiatives that African governments have pursued, the nature of the integration process, and the current challenges. Regional integration is seen as a rational response to the difficulties faced by a continent with many small national markets and landlocked countries. As a result, African governments have concluded a very large number of regional integration arrangements, several of which have significant membership overlap. They have a dismally poor implementation record. Part of the problem may lie in the paradigm of linear market integration, marked by stepwise integration of goods, labour and capital markets, and eventually monetary and fiscal integration. This tends to focus on border measures such as the import tariff. However, supply-side constraints may be more important.The work concludes that a deeper integration agenda that includes services, investment, competition policy and other behind-the- border issues can address the national-level supply-side constraints far more effectively than an agenda which focuses almost exclusively on border measures. (Hartzenberg, 2011) Alemayehu & Haile, (2002). Major issues of regional economic integration in Africa could be grouped into two interrelated broad areas: issues of implementation and the limitation of insight form both the theoretical and empirical literature regarding the specific approaches that are appropriate for the continent. Implementation issues cover both the economic, political and institutional constraints that surface at the implementation stage of economic integration treaties. The approach issue refers to the menu of options available to pursue economic integration.

Abstract: One of the major development challenges facing Africa has been the small and fragmented economies with low incomes and low level of intra-regional exports. In an effort to promote intra-regional exports, Africa has witnessed renewed momentum for regional integration. This study examines the effect of regional economic integration on exports in the COMESA region. It employs the fixed effects regression, random effects regression and instrumental variables GMM regression to estimate an augmented trade gravity model using panel data from 1980 to 2012. The study results show that the formation of COMESA trading bloc has promoted intra-regional exports, implying intra-COMESA export bias. Comparing pre-COMESA (1980-1993) and post-COMESA (1994-2012) periods, it was found that intra-COMESA exports have grown by approximately 35 percent since COMESA was formed. This suggests that in order to enhance export flows in the region, the process of economic integration should be deepened. Thus, there is need for increased investment in transport infrastructure that will reduce long distance cost of doing business. This would have a major impact on deepening integration of COMESA economies.

Abstract: This study is aim to discuss the backgrounds of the integration of one country that participates in Economic Union and one regional integration that your home-country participates in. critically analyze and how these regional integration affect or influence the participant countries with supporting statistics, evidence or arguments. Regional Economic Integration can best be defined as an agreement between groups of countries in a geographic region, to reduce and ultimately remove tariff and non-tariff barriers to the free flow of goods, services, and factors of production between each other. Come to the last part of the review, will discuss about voted to remain or leave the EU if eligible to vote on Brexit.

Kazakhstan as a country with a considerable amount of international trade surplus should not be overly concerned with its regional trade deficit with other Central Asian countries. The larger international trade surplus provides a basis for Kazakhstan to be a financial leader of the region, to be the engine of regional economic growth, and to be in the forefront to remove and/or to reduce international trade barriers. To do this successfully, the Kazakhstan government should open up its own market in order to realize the benefits of international trade. Therefore, Kazakhstan has to be a major proponent of the open market agreements that liberalize its markets for international free trade in the region. The intent of this study and its findings should help Central Asia to realize and increase gains from participating in and reduce costs associated with conducting international trade. To achieve these objectives, governmental officials and policy makers in the region should consider the followings: (1) Governments should review various regional trade agreements and analyze the possible relationships and potential conflicts between existing and planned regional agreements among Central Asian countries. (2) Identify and implement what are the best efforts and practices for all Central Asian countries to join together WTO, and how to liberalize further regional trade policy on a nondiscriminatory basis as part of WTO accession process. (3) Intensify their efforts to promote regional economic integration such as the formation of a common market in Central Asia. (4) Consider the possibilities of establishing a mechanism to monitor the implementation of regional trade agreements and regional economic cooperation.

Indonesia is facing the trade liberalization and regional economic integration with several free trade areas, i.e. bilateral FTA, regional FTA and multilateral FTA. The aim of this paper is to analyze the impact of those international relationships on Indonesian economic growth, poverty and income distribution. By using a Global Computable General Equilibrium (GCGE) model, we made eighteen simulations to analyze the current and the potential international relationship that is faced by Indonesia. Generally, Indonesia gains significant benefit in terms of real GDP, output and welfare except FTA with India. FTA also increases the household income of rural group higher than the urban group ones. Unskilled labor experiences more advantages than skilled labor and poor household gain more benefit than the rich household both in rural and urban areas. Those conditions imply that FTA potentially could be a solution for national poverty reduction.

EU impact on African regional integration The influence of the European Union on integration processes in Africa is multidirectional: on one hand, as the most developed integration commu[r]

Main areas of Economic Community can be divided into inter- nal — creating a single market and production base, formatting a region of equal economic development, and external — forming a highly competitive region, more precisely, sub-region — develop- ment center (along with China, the EU, NAFTA), which will be fully integrated to global economy. These areas can be seen as in- terrelated and synergetic, allowing their combination into a cog- nitive map with positive feedback. In general, within the Eco- nomic Community ASEAN distinguishes the five key elements of the common market and production base, which should be: free movement of goods, services, investment and capital, facilitation to the movement of skilled labor.

In 2014 the most powerful three representatives of regional customs unions of the world, namely East African Community (EAC), Cooperation Council for the Arab States of the Gulf (CCASG), and South African Customs Union (SACU) provided over 2,8% of world GDP 29 . In the context of assessment of poten- tial integration effects of Ukraine, the particular attention should be paid to investigation of macroeconomic results of performance of the Customs Union of Russia, Kazakhstan and Belarus, which was established in 2010 in the framework of regional cooperation of CIS countries and embraced over 2,4% of world population. According to first deputy head of the government of Russia I. Shuvalov 30 , the Customs Union was considered as "an interim stage towards creation of a common economic space from the At- lantic to Pacific Ocean… Then, it is planned to enter into free trade agreements with EU and Asia-Pacific Region countries". At the same time, formation of the Customs union creates essential competitive advantages for access to commodity and resources

Several systematic studies on the development of formal exchange rate coordination have been conducted including, for example, Girardin and Steinherr (2008), who proposed a road map for the development of a basket currency in Asia. Despite these attempts, there appears to be a consensus that it is premature at this stage for Asian countries to commit to a strict currency stability rule or any formal exchange rate coordination, let alone a monetary union. The basis for this argument includes the divergence in economic structures and a lack of supporting institutions and macroeconomic policy coordination within the region (Alesina et al., 2002; and Kato, 2007). It is also argued that a regime of inflation targeting can increase the synchronization of business cycles and, hence, help to ease the transition towards monetary union (Rose, 2009). Barro and Lee (2008) find that low political proximity among East Asian countries presents an additional barrier to the formation of a currency and monetary union in the region.

This paper undertakes an historical analysis of regional trading bloc formation in the 1980s. This time period was char- acterized by the formation of major global trading blocs, especially the European Union and the North American Free Trade Agreement (NAFTA), at the same time existing national structures broke apart, most notably the Soviet Union. A gravity model based analysis of trade flow data indicates that two forces operated simultaneously during the study pe- riod, one leading to the formation of trading blocs (as captured by a dummy variable for “same regions”) and the other leading to the dissolution of trading blocs (based on the interaction of GNP and the dummy variable for “same re- gions”).

In this paper, we will examine the level of services trade integration in Asia in comparison with Europe and North America. The main empirical findings of this paper are that (i) the regional bias of services trade in Asia is as high or higher than in Europe and North America; (ii) in Asia, the regional bias of services trade is higher than that of goods trade, which is in sharp contrast to Europe and North America, where the regional bias of goods trade is higher than that of services trade; and (iii) while Asia’s regional bias of goods trade shows a declining trend, that of services trade remains high, although in the future its decline is expected. Asia’s relatively high-level of regional bias of services trade can be explained by the following factors: (i) a relatively high prevalence of a shared language (Chinese), which is essential to services trade, but not to goods trade; and (ii) the archipelagic nature of the region, which inhibits goods trade more than services trade. In contrast, for example, major European countries share land borders with their neighbors and they speak different languages. In order to deepen Asia’s services trade integration, two policies are necessary. First, effective regional services agreements are critical to enhancing the level of integration. Second, policies to increase the trade of crisis-resilient services, such as professional services and insurance, as opposed to crisis-vulnerable services, such as transport and travel, are necessary.

114 sensitive lists in which Afghanistan has 1,072 items on the negative list; India has 25 items on the list for the least developed countries (LDCs) and 695 for the non-LDCs; and Pakistan originally had 1,169 items in its sensitive list but it has since cut that number down to 936. There are also FTAs and partnership agreements with the United States and the European Union. China is promoting an FTA with Central Asia. The Eurasian Economic Community (EAEC) is a customs union between Belarus, Kazakhstan and the Russian Federation. It introduces the free movement of goods, capital, services and people and provides for common transport, agriculture and energy policies, with provisions for a single currency and greater integration in the future. The EAEC has implemented common tariffs, harmonized customs procedures and eliminated internal customs controls. If fully implemented, the EAEC could cause considerable trade diversion from regional trade in Central Asia. Moreover, an analysis based on a computable general equilibrium (CGE) model of Kazakhstan suggests that implementing the customs union with a rise in Kazakhstan’s external tariffs would substantially slow down the growth of real GDP in that country. 75

The South Asian Association for Regional Cooperation (SAARC) is an organization of South Asian nations, founded in 1985 and dedicated to economic, technological, social, and cultural development emphasizing collective self-reliance. Its seven founding members are Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan, and Sri Lanka. Afghanistan joined the organization in 2007. SAARC was the result of increasing proliferation of preferential trading arrangements (PTAs) in different regions of the world and has been considered important development over the last two decades. And this was a step toward the regional cooperation. The main objectives of SAARC as stated in the charter are; a)to promote the welfare of the peoples of South Asia and to improve their quality of life; (b) to accelerate economic growth, social progress and cultural development in the region and to provide all individuals the opportunity to live in dignity and to realise their full potentials; (c) to promote and strengthen collective self-reliance among the countries of south Asia; (d) to contribute to mutual trust, understanding and appreciation of one another's problem; (e) to promote active and mutual assistance in the economic, social, cultural, technical and scientific fields; (f) to strengthen cooperation with other developing countries; (g) to strengthen cooperation among themselves in international forums on matters of common interests; and (h) to cooperate with international and regional organisations with similar aims and purposes." (http://www.saarc-sec.org).

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Even if these conclusions are hardly disputable, their significance for the nature and process of economic integration is unclear. Political reasons can explain the institutional configuration of the EEC original. But the further development until the end of the'80 and early'90, was almost entirely guided by the market and common economic policies of selective rather than cooperation in foreign policy or security issues or defenses. Also, key policy issues of local decision-making processes of Member States, such as employment, inflation, social security, safety or values of society were little affected by the European Community for several decades. Therefore, current practice is very difficult to track what the purpose or purposes of the policy have influenced the nature and process of economic integration in the EC. Some key decisions in the history U.E. are still impossible to explain without recourse to diffuse emotions, but persistent tracking of common policy objectives, particularly in times of crisis.