international and supranational institutionalized integration

INTERNATIONAL AND SUPRANATIONAL INSTITUTIONALIZED INTEGRATION

Dr. Truong Thi Kim Chuyen

Economic change and the new geopolitics

International and supranational institutionalized integration

The logic of integration Types and levels of integration The GATT (General Agreement on Tarriffs and

Trade) framework and the WTO Institutional forms of supranational integration

Spatial outcomes of economic integration

The imprint of the european union Trade creation and diversion Spatial polarization Effects of the common agricultural policy Regional policy External effects of the EU

ECONOMIC CHANGE AND THE NEW GEOPOLITICS

Although private companies are by no means absolute masters of their own fate, they do have the ability (as compared with governmental units) to redefine their commitments and objectives in response to the changing opportunities presented by the globalization of the world economy.

What has happened is that the logic of the world economy has in many ways transcended the scale of nation – state.

It was the international trade system that provided the major impetus for countries to be draw into various forms of institutionalized integration.

The particular advantages of formalized international and supranational integration include:- Potential for economies of scale,

particularly for the smallest countries and the weakest national economies.

- Potential for creating multiplier effects from the existence of enlarged markets.

- Potential for strengthening regional interaction by easing the movement of labor, goods and capital.

The particular disadvantages of formalized international and supranational integration include:- Potential loss of national sovereignty

over a broad spectrum of issues.- Potential for the intensification of

internal inequalities as a wider geographical context make for more pronounced process of uneven development.

TYPES AND LEVELS OF INTEGRATION

Formal Informal International Supranational Economically Strategic Political Sociocultural Mixed

INSTITUTIONAL FORMS OF SURRANATIONAL INTEGRATION

Free trade association: member counties eliminate tariff and quota barriers to trade from other member states, but each individual member countries to charge its regular duties on materials and products coming from outside the association.

Customs union: also involves the elimination of tariffs between member states, hut has a common protective wall against non-members.

Common market: internal restrictions on the movement of capital, goods, labor and enterprise are removed.

Supranational political union: a single monetary system and a central bank, a unified fiscal system, a common foreign economic policy and a supranational authority with executive, judicial and legislative branches.

Trade preference associations

SPATIAL OUTCOMES OF ECONOMIC INTEGRATION

Trade creation effects Trade diversion: will have taken place, with

the result that consumption is shifted away from lower cost external sources to higher cost internal sources, consumers have to pay more for certain goods and levels of living may be depressed.

It is relatively easy for core states to meet the political, social and cultural prerequisites for successful economic integration. These include:- Similarity in the power of units joining the association- Complementarity of elite value systems- Existence of pluralistic power structures in member

countries- Positive perceptions concerning (a) the expected

equity of the distribution of benefits from integration and (b) the magnitude of the costs of integration

- Compatibility of states’ decision-making styles- Adaptability, administrative capacity and flexibility of

member states’ governments and bureaucracies.

SUMMARY In the practice, the basic principles of

economic geography has resultes in three main outcomes: Reinforcement of the dominant core-periphery

structure of the world economy. Spatial reorganization of production as trade

creation and trade diversion affect both member and non-member states.

Creation and intensification of regional polarization as the economies of scale and multipier effects in regions most favoured by integration create backwash effects elsewhere.