Regionalism and Globalization Analysis

This assignment requires a critical analysis of the interplay between regionalism and globalization within the context of East Asia. Students must examine how these forces shape political structures, economic development, and security arrangements in the region. The provided bibliography offers a range of scholarly perspectives on regional integration, global governance, and the challenges faced by different regions.

Running head: POLITICAL ECONOMY
POLITICAL ECONOMY
Name of the Student
Name of the University
Authors Note

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Table of Contents
Introduction......................................................................................................................................3
Weakness in the EU’s approach to economic regionalism that were exposed by the global
financial crisis and its aftermath......................................................................................................3
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

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Introduction
The objective of this study is to focus on the EU’s approach to economic regionalism that
have been exposed by global financial crisis and its aftermath. Economic regionalism refers to
institutional arrangements that are designed to aid free flow of commodities as well as services
and to organize international economic policies among the nations. It has viewed as an attempt in
managing the constraints as well as opportunities that is basically formed by huge rise in foreign
economic ties (Acharya and Amitav 2012). Few examples of economic regionalism include- free
trade, economic unions, customs unions etc. Different schemes of economic integration were
mainly founded in Europe in that period of World War II. It mainly includes European Union,
EFTA (European free trade association) and European communities.
Weakness in the EU’s approach to economic regionalism that were exposed by the global
financial crisis and its aftermath
Economic regionalism initiated in Western parts of Europe and extended to East Asia,
North as well as Latin America and in other nations. Different types of economic regionalism are
mainly differentiated by integration level in which the countries were involved (Gilpin and
Robert 2016). One of the basic forms of economic regionalism is EFTA that facilitates in
reducing customs duties among their members. The currency as well as economic Union mainly
intends in economic integration with the help of general economic policy and removal of tariff as
well as non-tariff barriers. Institutional integration level is one of the economic regionalism
forms and is also known as tight regionalism (Beeson and Mark. 2014). One example of tight
regionalism is European Union (EU) that has been evolved from free trade sector to customs
union. However, incorporation within EU helps in creating spillover effects in political as well as

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social arenas. In addition, another method that has been used for classifying economic
regionalism forms is the method by which their non-members are treated. Non –members are not
discriminated in case of open regionalism. The APEC and EU contain different institutional
arrangements, which facilitates in promoting open regionalism (Haastrup and Toni 2013).
Similarly, closed regionalism inflicts protectionist measures for limiting non-members entrée to
the market of member states. There are few global factors that influence EU’s approach in
economic regionalism includes- multilateralism evolution, statement of WTO rules and
liberalization in global trade. In fact, these factors also complicate the foreign policy of EU.
The modern theory on economic regionalism is solely based on inter-governmental as
well as inter-states cooperation on issues in trade. This cooperation refers to expression of vital
changes that took place since 1990s. Firstly, they are the economic consensus expression that
praises promotion of exports rather than substitution strategies. Developed as well as less
developed nations shares the specific vision of economic policy (Lenz and Tobias 2012). This
vision relies on the basic concept that economic activities that do not represent the way for
successful development. Secondly, the necessity expression aids in reducing the multilateral
negotiation complexity in liberalized trade. Negotiations among the regions help in reducing
complexity through several problems and simplify agenda. Thirdly, this expression of need is to
preserve cultural or social peculiarities that are generally perceived as homogenizing process of
globalization. Economic regionalism has been basically featured by negative integration
strategies. Regional authority is mainly used for reducing national barriers to trade. However,
economic regions follow market supporting strategies and have splits its relations of governance
between national polity as well as trans- national marketplace. In addition, the members of EU

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have utilized regional aggregation in order to change their nations by not changing their own
institutions.
Economic Regionalism has become the worldwide phenomenon. Owing to increase in
international interdependence, nations seek to cooperate with adjacent states in order to tackle
problems that include environmental degradation and migration flows. The EU has been
considered as the primary exponent of economic integration for transforming animosities among
the states. Due to this, policymakers of other nations were attracted for providing stability and
security among the individuals. The theory of diffusion offers analytical tools in analyzing the
influence of communities on economic regionalism. The EU also seeks in strengthening existing
organization in the regions around the globe. However, it provides financial assistance, trade
agreements and confers interregional cooperation. In addition, the interregional channels
providing economic resources influences regional dynamics. The financial assistance of EU ‘s
also impacts on the regional dynamics. EU’s indirectly affects the economic regionalism through
competition as well as emulation process.
Economic regionalism is related with globalization in the form of open regionalism that
aimed at global market and resistance to market forces globally. EU’s approach in economic
regionalism process was to provide peaceful field where sovereign nations unites their efforts for
creating regional objectives (Lenz and Tobias 2013). Open regionalism is the framework that
describes the relationship between globalization and economic regionalism. The key drivers for
economic regionalism including decline in cost of transaction, policy externalities, advancement
of technologies owing to rise in competition, rise in FDI ( Foreign direct investments),
economies of scale facilitates the states in gaining from trading of goods with each other.
Regional cooperation as well as integration are the main drivers of economic regionalism.

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The new economic regionalism approached by EU typically involves nations that
involved in low tariff barriers and follows outward oriented strategies. These policies facilitates
in reducing the diversion cost of trade. However, it also stresses the gains from cost of
transaction and tarde barriers. On the contrary, the Asian as well as Latin American nations
claim to pursue open regionalism (MacLeod and Gordon 2015). It refers to cooperative
arrangement and is also referred to as concerted unilateralism. Moreover, it avoids diversion cost
of trade that troubled developing nation’s regional groups.
Research on economic regionalism is mainly classified into two various outcomes. As
opined by Hettne and Björn (2016), theories on international relations have considered
regionalism as international cooperation. This means that international relations significantly
affects on the regionalism. Firstly, integration as well as cooperation is the two main results of
regionalism. Furthermore, regional cooperation involves joint exercise of political authority of
each state in intergovernmental organization for solving action problems in relation to political
and economical issues. In contrast to this, regional integration involves framing up of
supranational organizations in which the political authority has been delegated in making binding
decisions. For example, setting up of foreign conflicts and dealing with adverse effects of
liberalization. Secondly, integration theories mainly initiates from European integration.
However, European integration also serves in estimating regional integration in other nations. As
a result, theories relating to regional integration have been applied to EU’s economic
regionalism. On the other hand, theories of cooperation cover economic regionalism outside
European countries.
The global financial crisis has some affect on its framework of regionalism and thus the
model that EU promotes such as liberalization in trade and democracy is presently in crisis for

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many nations in EU. For example, the main issue for South American economic regionalism is
mainly due to disagreements among the nations. The main aim of EU is to protect its nations or
regions from external competition. This however is also referred to as closed regionalism that
focuses at pursuing few strategies that includes import substitution for ensuring self-
sustainability as well as growth in the economy. Moreover, this approach of EU changed
completely during its second wave that is from the year 1990 onwards. Since then the economic
regionalism has been promoting exports of the nations and this led to initiation of new markets.
Another problem that has been identified for regionalism in South American is the protectionist
governmental measures and attitudes towards change in free trade between the regions (Jeffery
and Charlie 2015). In addition, the crisis of this nation’s regionalism has been the outcome of
several intergovernmental factors that led to the prototype of overlapping, duplicating and sub-
regional schemes.
Since the year 1990, economic regionalism in East Asian countries has observed
emergence of three various phenomena that includes Trans- pacific regionalism, rise in intra
regional organizations in this nations and influence of APEC. It has been noted from recent study
that economic regionalism has shown huge progress in European countries than in Asian
countries (Rose-Ackerman and Susan 2013). However, by promoting coordination among
national authorities, economic integration and developing intuitions among the regions, the EU
has created economic gains and reduced the gap of income among its member nations. On the
other hand, regionalism in East Asian has developed in different way. In this situation, the
markets drive regional integration more than their respective nations governments. Cooperation
among the authorities of these nations remains hub for economical issues and formal institutions.
The three weaknesses of EU’s approach in economic regionalism includes-

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 The banking Union- The global financial crisis has exposed the weakness of EU’s
approach in economic regionalism among the member nations. The weakness mainly lies
in monetary union without the banking Union. This monetary Union however divided
Europe both inside as well as outside Eurozone. However, in this circumstances, banking
Union and proper implementation of economic policies can be the best method in solving
this issue.
 Foreign policy- Foreign policy that has been adopted by EU has been one of their
weaknesses in their approach in economic regionalism. In fact, other countries also pose
various challenges through their foreign policies, which in other way affects their
economic growth of these nations.
 Political integration-One of its great weakness of EU‘s has been political integration
degree within the economy. The present level of political integration has been relatively
low and hence this gave rise to huge contradictions. Moreover, the EU has less powers in
the process of election of national governments in which the citizens has less
participation in direct way (Telò and Mario 2013). On the contrary, the economic
decisions that has been taken at the European level that affects the citizens of the country
are mainly resolved through governments negotiations.
EU faces huge challenges for the continuing economic crisis and these impacts on the
European countries. The governance principles of EU approach in regionalism includes-
 In order to make economic regionalism inclusive, they gives extra advantage to small
nations as well as minorities in making decision
 Making decision on some economical issues by majority voting

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 Open procedure of coordination that allows EU’s member nations for agreeing on
intergovernmental cooperation initiatives
 Economical decisions are mainly taken based on subsidiarity principle at the
governmental level
There are some theories that provide insights about regionalism effects. Economic
regionalism is stepping stone for globalization and it also influences the domestic policies of the
nations and political processes. It has been noted from the recent study that globalization process
and rise in economic regionalism approached by EU have profound effects on the financial
systems. In addition, regionalism involves less governmental action of the states for intervening
in the process of globalization (Söderbaum, Fredri and Shaw 2013). The resistance framework
basically concerns with the social values that includes distribution as well as social justice that is
considered as the key driving force for economic regionalism. Legitimacy has been the
fundamental concern for the policymakers that contemplates the regionalism form. Economic
regionalism also responded to globalization through rise in cultural identity and regionalist
parties. With broadening of economic regionalism, the uniqueness of EU becomes less with
respect to other regionalism forms. Rationalist cooperation approaches takes economic
regionalism as strategic states responses to the globalization challenges (Ravenhill and John
2017). On the other hand, social constructivist approaches facilitates in suggesting the cultures of
the nations in EU that are more or less well-suited with regionalism outcomes.
The global financial crisis (GFC) during the period 2008 -2009 was a vital event around
the globe. It caused slowdowns as well as massive wealth loss around the globe and reversed
world trade growth. Moreover, the effects of this GFC varied across different nations as well as
regions. But this crisis influences greatly on US and Europe and peripheries of Europe. The

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effect were conveyed through channels of real economy as economic slowdowns of developed
nations led to decreased demand for produced commodities that have been manufactured by
emerging markets. Global financial governance that has been most relevant to economic
regionalism in Europe is crisis management. Several attempts have been done by
ASEAN( Association of South East Asian Nations), AU (African Union) and GCC( Gulf
Cooperation council) in order to gain regional integration within the nations, but they have
failed in achieving it resembling the EU ‘s progress. Following the GFC, several challenges
faced EU that weakened their approach in economic regionalism (Okeke and Aniche 2012). The
first challenge that faced EU is rising fiscal coordination along with worsening outlook of the
economy. However, it is suggested that EU must improve their financial system and also follow
through severity measures initiated by its member states (Malamud, Andrés and Gardini. 2012).
Additionally, the share of EU in global GDP reduced from 24% to 22% during the period 1990
to 2010. Another challenge that is faced by EU is resolving their identity crisis. In addition, EU
has improved from customs union to only one market as well as Eurozone of the member
countries. Hence, they have been unable in strengthening political institutions and is consistent
with the requirement of integration.
Economic regionalism has proven effective in facilitating to protect the markets of the
member nations and provide strength in the economy through formation of RTA (Regional trade
Agreement). However, the globalization organizations namely IMF (International Monetary
Fund) and WTO (World Trade Organization) agreements unite the governments to their market
liberalization that confines their ability in pursuing macroeconomic policies (Sunkel, Osvaldo
and Inotai 2016). However, some regions or states of EU have reacted through economic
regionalism for preserving stability in culture and economy. However, debate creates from the

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fact that economic regionalism simply places international system and hence the scale of
regulation as well as stability that initiates from regionalism has been incomparable. Thus, with
economic stability that has been offered to nations by economic regionalism, it has been
forecasted that interregional relations will also rise in future.
Conclusion
From the above assignment , it can be concluded that the unifying factor in various types
of economic regionalism is basically the desire of the member countries for using wider space in
advancing economic interest. Economic integration is one of the example of its regionalism that
have been exposed by GFC . Moreover, economic regionalism approach by EU failed due to two
factors. Firstly, multilateralism served their major nation’s interest and hence economic rational
did not seemed to exist in these economies for pursuing regional alternatives. In addition, the
member nations have been apprehensive of trade arrangements and have restrained themselves
from this attempt. It is controversial that economic regionalism impacts on the political aspect of
nations agreement and global governance. Thus, foreign policy, political integration and banking
Union are the three main weakness of the EU’s approach that has been exposed by GFC and its
aftermath.

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References
Acharya, Amitav. "Comparative regionalism: A field whose time has come?." The International
Spectator 47, no. 1 (2012): 3-15.
Beeson, Mark. Regionalism and globalization in East Asia: politics, security and economic
development. Palgrave Macmillan, 2014.
Beeson, Mark. Regionalism and globalization in East Asia: politics, security and economic
development. Palgrave Macmillan, 2014.
Gilpin, Robert. The political economy of international relations. Princeton University Press,
2016.
Haastrup, Toni. "EU as mentor? Promoting regionalism as external relations practice in EU–
Africa relations." Journal of European Integration 35, no. 7 (2013): 785-800.
Hettne, Björn, ed. The new regionalism and the future of security and development. Vol. 4.
Springer, 2016.
Jeffery, Charlie, ed. The regional dimension of the European Union: towards a third level in
Europe?. Routledge, 2015.
Jonas, Andrew EG. "Region and place: Regionalism in question." Progress in Human
Geography 36, no. 2 (2012): 263-272.
Keating, Michael, and John Loughlin, eds. The political economy of regionalism. Routledge,
2013.

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Lenz, Tobias. "Spurred emulation: The EU and regional integration in Mercosur and
SADC." West European Politics 35, no. 1 (2012): 155-173.
Lenz, Tobias. "EU normative power and regionalism: Ideational diffusion and its
limits." Cooperation and Conflict 48, no. 2 (2013): 211-228.
MacLeod, Gordon. "New regionalism reconsidered: globalization and the remaking of political
economic space." International journal of urban and regional research 25, no. 4 (2015): 804-
829.
Malamud, Andrés, and Gian Luca Gardini. "Has regionalism peaked? The Latin American
quagmire and its lessons." The International Spectator 47, no. 1 (2012): 116-133.
Okeke, V. O. S., and E. T. Aniche. "Economic Regionalism and Dependency in Africa: A Study
of African Economic Community (AEC)." Oman Chapter of Arabian Journal of Business and
Management Review 1, no. 11 (2012): 5-23.
Ravenhill, John, ed. Global political economy. Oxford University Press, 2017.
Riggirozzi, Pía. "Region, regionness and regionalism in Latin America: towards a new
synthesis." New Political Economy 17, no. 4 (2012): 421-443
Rose-Ackerman, Susan. Corruption: A study in political economy. Academic Press, 2013.
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Sunkel, Osvaldo, and Andra Inotai. Globalism and the new regionalism. Vol. 1. Springer, 2016.

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Telò, Mario, ed. European Union and new regionalism: regional actors and global governance
in a post-hegemonic era. Ashgate Publishing, Ltd., 2013.