REGIONALISM and REGIONALIZATION

–RANTS

Objectives:

■ Define what is globalism and regionalization

■ Identify the advantages and disadvantages of regionalism

■ Identify the advantages and disadvantages of regionalization

REGIONALISM (a political process)

- A theory or practice of coordinating social, economic or political activities within a

geographical region comprising of states.

- Cooperation among states to create institutions to help bring about or support

economic integration in a region.

ADVANTAGES OF REGIONALISM

1. More practical and feasible. Everybody would agree that multilateral agreements
are the preferred instruments for liberalize international trade. Such agreements
ensure a non-discriminatory approach which provides political and economic
benefits for all.

2. Promote Freer Trade. Regional agreements promotes free trade. Further

regionalism has contributed to both internal and international dynamics that
enhance rather than reduce the prospects of global liberation.

3. Contribute to Multilateralism. They seem to be contradictory, but often regional

trade agreements have allowed groups of countries to negotiate rules and
commitments that go beyond what was possible at the time multilaterally. In turn,
one of these rules have paved the way for agreement in World Trade Organization
(WTO).

4. Demonstration Effect. Regional initiatives can accustom official, governments, and

nation to liberalization process. Learning by Doing applies to trade liberalization
as well as to economic development itself.

5. Positive Political Effect. Trade and Boarder economic integration has brought about
peace between neighbouring countries and thus has positive rather than negative
political effects. Trade and Boarder economic integration has created European
Union in which another war between Germany and France is literally possible.
 6. Compatibility. The supporters of regionalism note that Article24 of the General
Agreement on Tariffs and Trade (GATT), and now the WTO, explicitly permits
regional agreements and thus acknowledges their compatibility with the
multilateral trading system. The major regional agreements have been largely
justified in claiming their full compatibility with the multilateral system.

DISADVANTAGES OF REGIONALISM

1. Competitiveness among regions.

2. May develop to intermediate forms of federalism

3. It will be inefficient in terms of Law and Governance

REGIONALIZATION (a economical process)

- A process of dividing an area into smaller segments called regions.

- Market integration associated with the cross- border, flow of capital, labor, and
technology within a specific area or region.

ADVANTAGES OF REGIONALIZATION

1. Firms are better able to understand the cultures, legal and social norms, and
other factors that are important for effective competition in those markets.
Regionalization is the term often employed to describe strategies focused on
regional or local scale. These may include monetary, product/service specific,
culture related strategies.

2. Improved cost competitiveness through regional commodity management and

volume leverage. In regionalization, firms pursue different strategies in different
places. They can have different products in different regions or countries. They
can market them differently.

3. Regionalization is used as a management tool and a way to make certain that

needs unique to particular areas are met, it is the concentration of economic
activities – trade in goods and services, movement of capital and people.

4. East Asian regionalization works through FTAs (free trade agreement) - the
global trend toward membership in regional groupings, increased access to
markets, and the expected positive impact on economic growth.
DISADVANTAGES OF REGIONALIZATION

1. Unwillingness to share control with neighboring towns.

2. Believe that small is better.

3. Resistance to change.

4. Economic, educational and/or social differences.

5. Impact of state aid calculations.

References:

■ https://www.slideshare

■ https://www.piie.com

■ https://www.imf.org

■ https://kyotoreview.org/issue-4/economic-regionalization-in-east-asia/ and
Urata Shujiro. Economic Regionalization in East Asia.

■ https://kyotoreview.org/issue-4/economic-regionalizatio

■ Slideplayer.com

■ https://www.enotes.com/homework-help/what-regionalization-localization-
strategy-how-325321