Regional economic integration – toward reintegration

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Abstraction: Globalization procedures have influenced the economic policies of the European Union which move in way of complete integrating of European markets. In this instance the European market is split into the developed and & A ; lsquo ; protected ‘ Western European market and the developing market in Central and Eastern European states. Based on the analysis of the constructs of Regional Economic Cooperation in Europe, the links between international economic cooperation and integrating every bit good as internel development are analyzed. The analyzed country was one of those countries, which was after 2nd World War developing economic system under wholly different political system, therefore it was non possible to take full competitory advantages which lie in geographic ( transit and logistic ) factors every bit good as on the footing of international and regional co-operation. The relationship between macroeconomic integrating and the necessty of supplying instruments to cover specific countries or sector from important inauspicious effects of this procedure is given particular attending in the analysis. The theoretical constructs will be used for a chief rating of the demands for a future regional policy for an hypertrophied community. To avoid farther drawbacks it seems necessary to set up the unfastened western markets and supply a dependable government for development and cognition transportation. Structural financess are needed for reconstituting the economic system in Central and Eastern European states.

Cardinal words: Economic integrating ; Long run trade potency ; Regional cross- boundary line cooperation ; competition policy ; Supply concatenation direction ; EU policy, Reintegration, Regime for passage, Concepts of structural version and integrating.

Introduction

Globalization procedures have influenced the economic policies of the European Union which move in way of complete integrating of European markets. In this instance the European market is traveling to be split into the developed Western European market and the developing market in Central and Eastern European states. European Union is confronting a classical North-South job. Developed North and underdeveloped South. ( Vodopivec, R. and Coblo, R.et Al. :1996 ) The EU has adopted the position that they have to promote market forces to run and get down to deregulate their markets. To accomplish a nice economic development of whole EU, the EU must link cardinal member provinces of EU with the economic systems of the fringe. Both parts have to be connected by a system of economic co-operation. The integrating procedure of economic co-operation ‘ inter regional, crossborder co-operation has to go more intensive. ( Vodopivec, R. : 2005 ) . National economic systems use to work out this job with selective investings, regional planing, subsidies. EU tries to work out this job by taking at economic and societal coherence, so that the additions from integrating would be more every bit distributed.

Regional integrating has been an of import construct in the procedure of restructuring in Western Europe after the Second World War and is doubtless besides the most of import model in the on-going procedure of restructuring and reintegration of the East and Central European states. The old construct can supply guidelines for this policy, but the nature of the job is significantly different. In the 1950ss and 1960ss most of the states in Western Europe faced the same economic challenge and were besides similar politically in our instance state of affairs today, is cardinal different. The states still suffer from structural slowdowns, institutional as good economical. Economic public presentation is still deficient. Economic jobs are unsolved, internal every bit good as external balance jobs persists. The analytical point of going in this article is, that regional economic and political integrating theory can lend with important constructs to analyse this country of policy. The intent of this paper is to analyse the chief jobs in the procedure of passage and reintegration from a theoretical and conceptual point of position – political and economic theories of regional integrating.

The construct of regional integrating

After a period with worsening attending, regional integrating has once more become subject in assorted parts of the universe. Concepts of integrating are still polar in Europe, partially sing the internal development of the European Union, partially as a model of cooperation between the EU and the remainder of Europe. The intent of this survey is to supply a probationary lineation of a construct for the analysis of the procedure of reintegration of East and Central European states into the chief watercourse economic and political system in Europe, the European Union. The theoretical basis of the procedures of regional integrating can be found in economic and political theory of integration.1. Based on these constructs, the future chances of regional economic and political cooperation in Europe with particular attending to the links between international economic integrating and internal development, will be analyzed. The relationship between macroeconomic integrating and the necessity of supplying instruments to cover specific countries or sectors from important inauspicious effects of this procedure is given particular attending in the analysis.

Economic Integration

Traditionally regional economic integrating takes topographic point between comparatively similar states sing economic development or political traditions and institutional models. Equally long as we are covering with economic integrating between viing states we are in the mainstream of economic integrating, which is normally considered to be the country where the alteration for economic additions is highest. Since the chief benefits comes from economic systems of graduated table, specialisation and economic systems of range, the classical trade related advantages comes on the lower degree of integrating harmonizing to figure 1 below. Contrary, the nature of additions – and possible losingss – alteration when the procedure of integrating embark on organizing a true common market or an economic and pecuniary brotherhood. In this instance structural version and usual transportation payments are ineluctable. Although there have been many efforts to organize regional economic associations between 3rd universe states, their success has been instead limited. Harmonizing to Robson ( 1987, p.197 ) these efforts are normally based on the classical attack of general trade liberalisation ensuing in the formation of Free Trade Areas or Customs Unions. see besides Vodopivec R. 2002 2.

For a comparing of economic integrating in assorted types of economic systems see Brada & A ; Mendez, 1985. In their survey, based on the scrutiny of their ability to advance inter-member trade, one consequence was that the environmental factor inter-member distance was the most of import single factor. Sing the effectivity of their integrating policy, the survey shoved a comparatively hapless record for the extremely institutionalised EC. The latter can partially be explain by the period of probe, the early 1970ss were most trade effects from the execution of the Customs Union were achieved. The 2nd job is to guarantee, that they conform to particularly GATT ( WTO ) regulations on non favoritism and equal intervention every bit good as to avoid likely inauspicious impacts on East and Central Europe dealingss to the European Union. Recent association understandings between The East and the EU have already proved the importance of these concerns every bit far as outstanding sectors of the EU are involved ( European Economy 1994b ) .

A cardinal issue in the treatments of the function of regional economic integrating with respect to the formation of an international trade government is whether regionalization has to be considered competitory or complementary to planetary solutions. This issue is besides relevant in a reintegration position since close understandings with or rank of the EU, requires credence of the & A ; lsquo ; acquis communautaire ‘ , the sum of legal regulations and imposts developed through 40 old ages of cooperation. In peculiar with regard to competition and trade policy the direct economic impacts will be important from the beginning in the East and Central European states. In a longer position of integrating similar effects will originate in the field of environmental policy, industrial policy and labour market ordinances, when version to the Common market degree of integrating takes topographic point. From an economic point of position, this has traditionally been addressed from an international trade and specialisation position with major attending to the trade creative activity and trade recreation effects and the additions from range and scale economic systems. Particularly impacts on footings of trade has been considered to be of import, partially for economic grounds, partially through increased influence of the involved states in international trade dialogue.

The political institutional side of this procedure has at least in the last twosome of old ages been highlighted even more, viz. through the experience made in the EU. At least integrating beyond the Customs Union degree ( see figure 1 ) does non look non to be operable without a strong political committedness. The taxonomy of economic integrating in figure 1 coincides with the institutional committedness or capacity-concept discussed in the old subdivision. The tighter economic cooperation, the more of import is a joint system of policy devising. The figure non merely indicates an increasing degree of economic integrating, but besides an turning demand for policy coordination. In peculiar, the intermediate stairss of integrating are unstable in an economic sense, since traditional instruments of economic policy are non available on the national scene, and a joint policy-making system with supranational power is non established on Community degree yet. A acknowledgment of this job were one of the drift ‘ to organize non merely the individual European market in the 1980 ‘s, but besides to reform the determination devising system harmonizing to the analogue of the Single European Act. The deficiency of correspondence in this field in the execution of the Treaty of European Union ( TEU ) is likely the major challenge, non merely for the Economic and Monetary Union, but besides for the enlargement procedure.

Sing the reintegration of the former province trade economic systems into the western dominated market economic system the nature of the issue of complementarity and fight are more complex. Historically most of the states are familiar with the rules of the market, and at least some of the mechanisms used in the CMEA were similar to western constructs of integrating. The traditional rules of integrating in the former CMEA were at least to some extend based on the development of scale economic systems in competitory sectors of the involved states, harmonizing to common programs within the model of the socialistic division of labour ( see Robson, 1987, 215-232 ) .

The important issues for the emerging market economic systems are, that schemes sensible in developed capitalistic states in the 1960ss and in a somewhat modified version when establishing the Individual European Market Program in the center of the 1880ss, are non necessity executable for states undergoing a procedure of entire social restructuring. First of all, schemes based on many-sided trade liberalisation will non work in an environment of immense differences in economic public presentation and construction. The increasing competition from the established market economic systems will necessitate protection of infant industries with possible harmful effects of developing a & A ; lsquo ; substandard ‘ industrial base to vouch the development of a healthy industrial base. To do this scheme feasible a co-ordinated Western credence of one-sided discriminatory intervention and big foreign direct investing seems necessary.

Foreign Direct Investment activities in Central and Eastern Europe, and the coordinating activities which means shacking in the low combined local and international revenue enhancement systems predominating, the Central Europe appears today as the Centre of the whole universe ‘s foreign investing flow. Harmonizing to the Conference on trade and development of United Nations. , foreign direct investing has dramatic rate of growing in the Cardinal European country, ( see table 2 ) . Case of Czech Republic.

In the 10 old ages observation of the one of the Central European province – Czech Republic, we anlyse inward foreign direct investing by state. We can reason that there is ( historicly ) traditional presence of the German foreign direct investing in the – Czech Republic, based on the historical big trade flows between states and their specific ties, caused by this trade flows every bit good as the relevant presence of the German industry, active in the outsourcing processes. But recent experiences in the EU have shown how loath is the EU in other instances where Western European states do non hold direct involvement in sectors within which the East European states are potentially competitory like fabric, steel and agribusiness.

From a rule and ideational point of position the consequence of our treatments so far seems to be clear. In existent universe political relations obstacles persists. With respect to practical policy doing it can be questioned whether regional integrating is an appropriate model at all for states which for a considerable period will trust on exports from sectors with comparatively limited potency for scale economic systems instead so on sectors with big potency for graduated table and range economic systems. The lessons of the & A ; lsquo ; up ‘ and & A ; lsquo ; downs ‘ of West European integrating are unambiguous. It seems ineluctable that economic and political integrating has to travel manus in manus. Merely co-ordinated policy in these two subdivisions of international cooperation – both on the regional and planetary degree – can take to a successful and permanent consequence. The cardinal thresholds of these procedures applied to the reintegration of East and Central Europe is summarized in figure 1.

Decisions

The present clip of political and economic integrating of former socialist states of Central Europe into the European Union has dramatically changed the state of affairs of major European states. Opening of Cardinal European and Eastern European markets gives new development possibilities besides for Western European states. Regional integrating trades with political and economic facets. The procedure of reintegration of East and Central European Countries is political every bit good as economic. The lesson of European integrating is that the two procedures are indivisible by in pattern. The analysis in the old subdivisions have shown, that the passage procedure walks manus in manus with immense socio-economic alterations in the East and Central European Countries every bit good as the fact that the procedure will necessitate structural alterations in the West European manner of collaborating and in the policy of economic equity. Economic integrating on the lower degrees trades with remotion of barriers, – negative integrating in Tinbergens nomenclature ( Robson 1987 ) .

In Europe the procedure of negative integrating is followed by the set-up of new models for the economic systems, viz. the about enforced Common Market and the Economic and Monetary Union. This positive stairss of integrating in a Tinbergens sense are impossible without a political and institutional back-up. In this point the political and economic constructs of integrating coincide if development follows fruitful circle ( & A ; lsquo ; spill-over ‘ or & A ; lsquo ; frontward -linkage ‘ ) . If the result is negative we are covering with & A ; lsquo ; spill- dorsum ‘ or & A ; lsquo ; out-put-failure ‘ harmonizing to Lindberg and Scheingolds theoretical accounts ( see table 1 ) . The combination of these two attacks – in the 40 old ages position of integrating in Western Europe – constitutes a fruitful model for the apprehension of the implicit in procedures of system-transformation in Europe as a whole, and of the passage and transmutation procedures in East and Central Europe. For existent universe political relations the lesson could be:

  • The procedure of system transmutation is an All-European procedure, and non merely a procedure for the applicant states.
  • Economic integrating has to travel beyond negative integrating, and include engagement on equal footings for East and Central European states in the edifice of a new economic fundamental law ( positive integrating )
  • Passage periods and economic transportations have to be adapted to each other ( the more restricted the transportation payments, he longer transition-period or freedoms from EU-rules.

Last but non least, the analysis of difficult nucleus economic figures indicates, that is seems executable to travel farther and faster with respect to the political facets of integrating in short and average term, than with economic integrating.