Why Has Regionalism Become such a Popular Strategy to Cope with Globalization - Literature review Example

Institution : xxxxxxxxxxx Title : xxxxxxxxxxx Tutor : xxxxxxxxxxx Course : xxxxxxxxxxx @2013 Introduction Globalization may be defined as the process through which individual state economies rapidly get integrated, thereby creating a global economy which has unified policy frameworks, for instance through international organizations (Cosetta 2009). According to Molchanov (2005), it is a global culture in which there are a lot of interactions and mobility in factors of production. Global social and economic forces continue to have a great effect on people and places worldwide. Nations across the world have therefore had to adapt to the changes brought by globalization, and one of the ways through which they have done this is through joining regional organizations hence regionalism. The popularity of regionalism in recent times is due to its role in adapting to the challenges posed by globalization. This paper discusses regionalism as a way of adapting to changes within the world economic system. Regionalism and Globalization Regionalism may be defined as the kind of institutional arrangement which groups of nations that share a geographical location develop as a way of facilitating their joint national needs, for instance, security, political or economic. It is a deliberate attempt to effectively manage the challenges and opportunities that have resulted from a great rise in cross-boundary ties since World War II. The various regional groupings have not only been founded on geographic nearness. Increasingly, states have found themselves being members of regional blocs due to a rise in economic interdependence, similarity in political structures for instance in the definition of democracy and shared political and cultural elements (Sampson 2003). Vincent (2010) explains that the world’s economic climate has experienced a great transformation as it has continued to evolve. With this change, regionalism has become a necessity rather than an option for national entities in order to maintain their competitiveness. Although regionalism has faced a significant amount of skepticism since it started, it has been a durable and adaptable feature in international relations. While some critics had initially believed that they were simply a temporary post-war trend, this has not been the case. More countries in the twenty first century are continuously joining regional blocs (Telo 2012). Haynes et al. (2011) add that even though regional organizations are formed for varied reasons, they all tend to share a common desire to help predict other nations’ behaviours and thereby reducing the uncertainty that would have otherwise existed. States generally join regional organizations so as to create, build and strengthen cooperation with others for specific purposes, but in most cases this has to do with economic development and security issues. Some organizations develop specialized institutions to handle the various aspects of their functioning while others do not. Cooperation is a way of raising the levels of welfare, security, bargaining power and influence. Siddique (2007) confirms that indeed, the increase in regional blocs has been one of the major features in international relations. Virtually every nation in the world belongs to a bloc, and a large number belongs to multiple regional agreements. Over a third of all world trade activities occur within the framework of such agreements. Although regional agreements are not uniform in their characteristics, all of them share the objective of minimizing barriers to trade amongst themselves and therefore discriminating against non-members. They basically get rid of tariffs on their trade, although many go beyond this and include non-tariff barriers and further to the extension of liberalization of investment, among other policies. Growth in regionalism has also been due to a global need for economic union, founded on shared legislative, executive and judicial institutions. In this way, they are a form of adaptation to worldwide trends and need for greater competitiveness in the world system. According to Arestis (2003), security cooperation has also witnessed growth throughout history. This is unusual because international security is considered to be an aspect in which cooperation is difficult to achieve. Economic cooperation has also bypassed the expectations of scholars from the time they arose. Cooperation has been attained in a broad range of matters, and regional institutions continue to cement orderly relationships among nations. Reasons for Popularity of Regionalism as a Strategy Regionalism is a growing tool for the facilitation of economic, security and other joint initiatives and strategies within the global community of nations. The cooperation which is involved is a positive measure in the current world where the effective utilization of limited resources remains critical. As a result, a large number of countries have been able to achieve great steps that they would not have been able to achieve alone (Vincent 2010). In the last two decades, there have been strong pressures within the international economic setting, and this affected nations which in turn had to liberalize their trade, both regionally and bilaterally. Governments are also increasingly being pressured by their citizens and industrial lobby groups to create policy frameworks that will be acceptable to both groups’ interests. These are usually the maximization of economic welfare and business profits respectively (Telo 2012). With these pressures in the background and disagreements at the World Trade Organization in regard to investment liberalization and multilateral trade investments, governments have over time had to make changes in policy so as to improve the economic welfare and financial profits of their voters and businesses respectively. One of the ways through which this has been achieved is through the signing of Regional Economic Integration agreements, including bilateral ones, hence promotion of regionalism (Molchanov 2005). According to De Lombaerde (2006), the growth in popularity of regionalism has been inspired by a variety of reasons. One of these in economic and security cooperation has been changes in the international system’s structure, leading to the need for states to adapt to various changes in both the regional and global balance of power. Regionalization has been a response by countries to the shifts and in this, institutions have been established to consolidate and strengthen the positions of both weak and strong nations as they pursue their shared interests. Related to this, there are the core states and their role as regional or global leaders. The regional and global powers have tended to establish regional options for themselves and other regions. Local powers have a major role in bringing together institutions within their regions that can boost their visions regarding regional order. For instance, there is China, which has been a driving force in the development and expansion of trade in Asia and South Africa, which has been doing the same in Southern Africa (Oppong 2011). At the global level, the United States has had a strong impact on the kind of regional agenda pursued around it through prioritization of issues while rewarding or punishing countries which accept or refuse to conform respectively. For instance, within the new security environment since September 11 2001, there has been a strong demand on institutions and states to respond to the guidelines set by the US in relation to Weapons of Mass Destruction (Sampson 2003). States generally attach a lot of value to institutions. Institutions have not been static over time. Rather, they have survived and gained new functioning, adapting to changes in conditions for instance state types and regimes. In the provision of more predictable foundations for negotiations and cooperation therefore, institutions have continued to be very helpful tools for statecraft and diplomacy (De Lombaerde 2006). Arestis (2003) argues that the growth in popularity of regionalism may also be attributed to an international move from a closed model of regional integration to a more open approach to international issues. Many of the blocs that were established by developing nations during the 1960’s and 70’s were for instance founded on import-substitution models, with regional agreements that created high barriers to external trade being used as a means of implementing such models. However, in later times, the situation changed, with countries adopting a more outward perspective and being committed to the promotion rather than control of international business. One reason for the rapid development of regionalism is a growing recognition that effective regional integration needs efforts that go beyond the reduction of quotas and tariffs. According to Cosetta (2009), many kinds of barriers usually end up segmenting the markets and limit the flow of ideas, goods, investments and services, hence wide-ranging policy approaches that go beyond the basic trade policies need to be adopted. This has led to the establishment of more regional blocs that have a broader approach to trade issues, and therefore a growth in participation of countries in such groupings. Such developments have occurred within the context of rapid globalization. New technologies have been adopted, and policy makers have taken more liberal approaches in their work. The overall effect of this has been a boost in trade volumes, greater investment flows and a decrease in production costs. All these are competitive advantages that no country can afford to miss, hence growth in regionalism as a response to change. According to Telo (2012), one of the factors that may explain the rise of regionalism as an adaptive strategy in the face of globalization is the wish of governments to be part of better policy frameworks, including democracy. The main platforms through which this can be achieved are the regional blocs which usually outline the standards for such practices as part of their agenda. When bound in this manner, there is a signal sent out to investors on what to expect if they are interested in such countries. In addition, there is an increase in the need to get more secure means of accessing major markets. This is usually achieved mainly through trade agreements and utilization of the economies of scale that come with integration. Governments have also in the recent past developed the desire to maintain their sovereignty in the face of globalization through pooling their individual sovereignties with their neighbors in aspects of economic management where individual states may be too small to operate alone. Arestis (2003) explains that neighboring countries may at times feel the need to assist each other to prosper and stabilize, and this encourages them to opt for regionalism. The motivation for this may either be altruistic or the need to prevent population and unrest spillovers from weaker neighbors into the stronger ones. In addition to this, there is often the general fear of being part of a general trend towards regionalism worldwide. This may be because being left out will be harmful to those who are excluded or simply because it is what everyone else is doing. Lastly, Haynes et al. (2011) observe that there is an overall change in the understanding of the role played by openness in development. This is in addition to a natural political need by states to minimize the feared costs of adjustment in a unilateral, non-discriminatory form of liberalization. There has been an indisputable growth, both in terms of the number regional institutions established and the kinds of activities that they take part in within the last fifty years. Membership to regional blocs has become a reality which most nations have to be part of. Basing on what has been so far discussed, it may therefore be argued that regionalism is becoming an important and well-established component in world politics. However, such an argument maybe countered by the fact that a mere increase in number does not necessarily mean that such institutions have grown in importance. It may rather be result of a rise in the number of active states in the international system. It is also true that institutional growth has a close correlation with eras of state formation and decline, for instance the end of World War II and Cold War respectively. In addition, the expansion in activity within international institutions might not necessarily be an indicator of the rise in their effectiveness, but rather a shift in their focus, for instance from economic to security matters. However, it remains notable that regionalism is one of the main ways through which states have had to respond and adapt to globalization. Conclusion The pressure due to globalization has forced firms and states to seek business efficiency through joining larger markets, being more competitive and finding ways of accessing foreign investment and technologies. Regional organizations are a product of globalization. Irrespective of their location, they share the fact that they arise in instances where due to globalization, countries all over the world have found themselves being part of significant regional networks of political and economic institutions. Regional cooperation is inspired by the consequent need to seek various objectives that they acknowledge they might not be able to achieve if they set out to do so alone. With time, the most significant motivator for regional integration has been the desire to deal with challenges that have come up due to the globalization process. 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