REVIEWER 2

REGIONALIZATION AND GLOBALIZATION

Globalization and regionalization are contradictory units because their goal in several cases may be the
same while they may vary in others. These processes form new institutions in the global economic space
that determine the behavior of the macroeconomy. Thus, transplantation of institutions occurs in most
developed countries, which causes a solid socioeconomic dependence of recipient countries, hinders
their development, enhances the technical-economic underdevelopment, reduces welfare, and
increases economic and political risks. Hirata et al. (2011) cited that the relentless forces of globalization
and regionalization have reshaped the world economic landscape over the past quarter-century. Global
trade and financial flows have registered unprecedented growth during this period (Hirata et al., 2011).
Intraregional economic linkages have also become strong with the proliferation of regional trade
agreements and common currency areas.

The definition of globalization is a complex issue because a single definition of the phenomenon is
present in the works of Russian and foreign scientists (Marginean, 2015). On the one hand, the most
significant emerging phenomenon in international growth is the process of globalization. On the other
hand, the practice of national integration is on the rise. Globalization and regionalization are
controversial terms. Globalization is meant to be something general, complete, and universal. Most
authors interpret and apply the concept of globalization exactly in this meaning. Phenomena, factors,
tendencies, and processes are referred to as “global” ones that have become valid for the world
community in general and affect the interests of all peoples, countries, and cultures.

The concept of regionalization was generally used in geography and systematization within several years
to reveal various regional-level features (Fujita, Krugman & Venables, 1999). However, after the second
“cold war,” the “regionalization” concept was beyond this framework. The term was caught up by
political scientists, specialists in international relations, and economists attempting to understand world
development tendencies. Thus, regionalism by nature is inseparably linked with political goals, cultural
values, and historical aspects. At present, “regionalization” helps study the nature of regional
cooperation as the answer to globalization forces (the growing awareness of regional interests in the
face of global influences) and an intermediate stop on the way to full globalization (regional blocks
formation as the first step in common political and economic system formation).

Thompson (1998) explained regionalization as a process that draws states and groups together based on
their proximity because of economic advantages, security, environment, and other issues with a region-
wide impact. Regionalization is more of a social-driven and bottom-up process. Oman (2008) defined
globalization as the movement of two or more economies or two or more societies toward greater
integration with one another. Regionalization can also be driven by economic forces that drive
globalization or political forces that have underlying motivations, such as mutual security, development,
etc. Oman provided the basic institutional factors required for nation-states to pursue regionalization.
These factors are as follows:

Participating governments use additional economic powers to decrease impediments to intraregional

economic activities, such as removing or reducing tariffs and ease of mobility for citizens of each
regional member state.

Governments' movement to pool their policy sovereignty generally aims to strengthen sovereignty
about the global market.

Globalization is the continuation of internationalization processes. According to Shishkov (2001),

globalization represents a new, advanced development stage of the well-known internationalization
process or the trans-nationalization of various aspects in public life, that is, economic, political, cultural,
confessional, etc. Zagladin (2002) had a similar view, that is, “by globalization, we should understand a
new stage of world development which is characterized by sharp internationalization rates acceleration
in all public life spheres (economic, social, political, spiritual).” According to Osadchaya (2002),
globalization is the next stage of internationalization based on the development of information
technology. Internationalization is generally the process that assumes “action combination of several
subjects of the world economy and the policy of the general tasks, purposes, activities.”
Internationalization as a phenomenon should appear early in history while forming social and territorial
structures (cities, constitutional states, etc.). Its main function is to provide stable international relations
in the real world (Kosolapov, 2001). Now, the term “globalization” is used to characterize planetary-
scale processes in the fields of economics, politics, culture, ecology, and other spheres of the world
community that have common nature; according to the content, it affects the interests of all world
communities (Baburina, 2008).

However, Pirnuta (2016) claimed that regionalization constitutes a result, that is, a means of protection
against globalization. Regionalization becomes a tool that can be used to overcome the difficulties due
to national states' small size.

ASIAN REGIONALISM

Regionalism is seen as a venue where the state is weakened or strengthened. It can serve as a barrier or
a bridge to greater cooperation, coordination, and interdependence. Given that most Asian countries,
including those in the Southeast region, belong to the Global South, we should study how culturally
diverse but economically similar nation-states are affected by regionalization.

Latin American regionalism echoes the same experiences and aims of Asian countries. However, Asian
regionalism differs significantly from Latin American regionalism regarding its member states’
ethnolinguistic background. With regards to ASEAN, we should assess how a highly diverse group of
nation-states can effectively merge into a close regional grouping. In1968, ASEAN was born with five
original founding members: Thailand, Philippines, Malaysia, Indonesia, and Singapore. In 1984, Brunei
joined ASEAN after its independence from Britain. Vietnam joined in 1995, Laos and Burma in 1997, and
Cambodia in 1999. East Timor’s application for membership to ASEAN is still being processed, but it can
participate in ASEAN activities as an observer. At the time of ASEAN’s founding, security was the mutual
concern of these countries.

The relationship between the five founding members was not without tension. Before ASEAN was
formed, each country accused the other of supporting secessionist movements and destabilization
efforts against another. The unproductivity of interstate conflicts and the refocus of each government’s
effort to build unified nation-states that are deeply divided by religious, ethnic, linguistic, and cultural
differences led to the formation of ASEAN. ASEAN is considered as the antecedent of other
regionalization efforts in Asia.

Factors that are Leading the Asian Region into Greater Integration

Regionalism in Asia is emerging against the backdrop of a remarkable half-century of economic

development. From 1956 to 1996, the standard of living in East Asia, as measured by actual (inflation-
adjusted) output per person, increased at a rate faster than has ever been sustained anywhere else
(Asian Development Bank, 2008).

Source: https://aric.adb.org/emergingasianregionalism/pdfs/Final_ear_chapters/chapter%202.pdf

According to the Asian Development Bank (2008), out of the ten (10) economies that recorded an
average increase of 4.5% a year or more during that period, 8 were in East Asia, with four exceeding
5.0%. Other Asian economies are in the upper tiers of the ranking in the world’s growth distribution.
Over the four decades, the living standards in the 16 integrating Asian economies that were examined in
this study increased at an average of 5.0% a year, while the world as a whole averaged only 1.9%. Even
though many other countries have experienced rapid growth over several years (Hausmann, Rodrik, and
Pritchett 2004; Jones and Olken 2005 cited in Asian Development Bank 2008), this cluster of sustained,
consistent outperformance is unprecedented.

In studying the trade integration of fifteen Asian and Oceanic economies, we identified the presence of a
common factor driving the degree of trade integration of the selected economies. The estimated
common trade integration factor displays deterministic seasonal patterns. It is also affected by the
economic activity and the trade barriers between the selected economies. We also documented the
presence of an ASEAN group factor that affected the degree of trade integration of the five ASEAN
economies in our sample.

Several factors that are leading the Asian Region into greater integration (CourseHero 2021):

Trade – The world economy is intertwined and interdependent with each other. Global trade facilitates
and harmonizes the exchanges of goods and services between countries in the world.

Similar culture – The cultures of Asia are diverse, but they share many similarities. This phenomenon
makes integrations an easier fit during times of negotiations.

Shared goals – The Asian region recognizes the mutual benefit of slow integration. The territories
involved have common interests and close to each other. The workforce of its population can serve as a
powerful negotiating block against those from other parts of the world.

How the Different Asian States Confront the Challenges of Globalization and Regionalization?

Thus, the challenge for regional cooperation is twofold, that is, to support the integration of Asia’s
production networks and sustain an open, rules-based global system of trade and investment. This
argues using the region’s influence vigorously to ensure the global trading system's continued
development. However, with the World Trade Organization’s Doha round deadlocked, many Asian
economies have also turned to negotiate bilateral and plurilateral free trade agreements (FTAs).
Substantial gains can be realized from consolidating the many FTAs into a single, region-wide one and
adopting best values and practices to guide future regional and subregional FTAs (Asian Development
Bank 2008).
In practice, regionalism and regional problem-solving are neither simple nor straightforward. Acting
regionally, particularly forging the agreements, powers, and tools to do so, is difficult. Regionalism
inevitably confronts four formidable challenges, as follows (Foster 2001):

Philosophical Challenge. Regionalism faces ideological differences and contradictions, like the classic
dilemma of a diverse and democratic society: how to realize the common good while safeguarding
individual freedoms. Some states do not conform to the international standard of human rights and
democracy, while others advocate its widespread.

Political Challenge. Regionalism is infused with political struggle. Sometimes regional interests are
contrary to the local or national interests, thereby creating winners and losers and conflict. A region
typically lacks constituents that are more loyal to it than to their localities or other communities of
interest. Even among regionalists, people disagree over the core values and strategies of regional action.

Governance Challenge. Even if a region can determine a common ground and align on political
approaches, most regions in the United States lack a polity, a multipurpose entity that is authorized and
empowered to function and represent the metropolitan public good. There is no executive, no
legislature, no constitution, no by-laws, no public hearings, and no place for the buck to stop, unlike
states, cities, and towns in regional organizations.

Empirical Challenge. Regardless of high hopes and bold claims, the impacts of regionalism are still
uncertain. Societies are understandably cautious about abandoning the status quo for the unproven or
insufficient benefits of a new regionalist order. Until regionalism impacts become universally known, the
appropriate regional path will remain uncertain.

ASSOCIATION OF SOUTHEAST ASIAN NATIONS (ASEAN)

The ASEAN is a 10-membered regional organization that promotes cooperation and facilitates cultural,
educational, security, political, and economic integration amongst its Southeast Asian member states. It
regularly engages in vital international affairs and other states outside its immediate sphere of influence.
Its combined population is nearly 640 million people and has a combined gross domestic product of
$2.57 trillion.

ASEAN was an overtly security-focused regional group during its initial stages. The United States of
America was involved in forming this regional group. As a “bulwark against a further communist advance
in the region,” ASEAN was also a venue for reconciliation for nation-states embroiled in conflict with
their neighbors, such as Indonesia and Malaysia’s Konfrontasi. ASEAN held its first summit in 1976 in
Bali, Indonesia to discuss the ramifications of the communist victory in Vietnam. In this summit, the
founding members agreed to prioritize regional economic cooperation on the ASEAN agenda. In 1977,
the economic ministers of the ASEAN members adopted the Preferential Trading Arrangement, ASEAN
Industrial Projects, and the ASEAN Industrial Joint Venture.

Perhaps the most significant treaty ratified by ASEAN states was the Treat of Amity and Cooperation,
which stipulated that signatory members must not use violence against other signatory members.
Shortly afterward, the present-day ASEAN members have been accepted by the regional group. In 1992,
the ASEAN Free Trade Arena proposal was presented at a summit held in Singapore; it was planned to
be created within 15 years. In 1995, all member states signed the Treaty on the Southeast Asia Nuclear-
Weapon-Free Zone. In 2001, ASEAN members signed the Hanoi Declaration, which intended to narrow
the development gap for closer economic integration in Southeast Asia. It would become the basis for
the Initiative for ASEAN Integration.

Security concerns remain among the top priorities within ASEAN. In 2001 and 2002, ASEAN signed the
Declaration on Joint Action to Counter Terrorism, ASEAN-China Agreement on the Spratly Islands, and
the ASEAN-US Joint Declaration for Cooperation to Combat International Terrorism. Other societal
issues, such as transnational criminality, immigration, and environmental issues (e.g., forest fire haze),
continue to be the central concerns tackled by ASEAN. Today, ASEAN is among the most successful
regionalist projects conducted in the Asian region, ushering in harmony, interconnectedness, and
barrier-less formal and informal interactions of its governments, economies, and people.

The ASEAN Way: All-Embracing ASEAN

Initially, ASEAN sought to mend the tumultuous relationship of its founding member states. ASEAN’s
initial plan to coalesce Southeast Asia’s ideologically compatible states, the original founding members,
positively impacted the Southeast Asian region. It resulted in the cessation of conflicts and hostilities.
Southeast Asian states could then focus their attention on their shared history of external interventions
and colonialism. Leading Southeast Asian figures saw that outside powers are deeply interested in
keeping Southeast Asian countries fragmented, divided, and weak. ASEAN member states recognized
the need for national and regional resilience amidst the continuing interventionism taking place. The
resulting division and isolation of Southeast Asian countries from one another rendered them
susceptible to tremendous pressure and antagonism of the dominant states. If this fragmentation would
persist, then it would result in insecurity for each Southeast Asian state. Allowing ideological differences
to divide the Southeast Asian region leaves it prone to intervention. Thus, from a limited circle of states
with compatible ideologies, ASEAN welcomed other Southeast Asian countries whose ideologies differed
from the ideology of the original anticommunist founding states. ASEAN welcomed the membership of
Cambodia, Vietnam, Malaysia, Brunei, and Laos, following this principle.
The principles that ASEAN operates on institutionalizes this shared all-embracing mindset of its member
states. Such principles are consensus, consultation, noninterference in internal affairs, and peaceful
resolution of conflicts. For a group of developing countries, these principles enable an open and
inclusive relationship among its members.

ASEAN Plus

ASEAN’s efforts at establishing cooperation and linkages with states and groups outside its grouping
manifest in its attempts to engage neighboring Asian states. In 1997, ASEAN involved Japan, China, and
South Korea to exchange points and dialogue regarding solutions to the Asian financial crisis. This
initiative positively evolved into the East Asian cooperation movement that is popularly known as ASEAN
Plus Three, which was followed by the East Asian Summit (EAS), including ASEAN Plus Three. Afterward,
the EAS included ASEAN Plus Three, with India, New Zealand, and Australia. In 2006, ASEAN was given
an observer status at the UN General Assembly. ASEAN reciprocated by awarding the UN with a
“dialogue partner” status. The organization would develop into ASEAN Plus Six with the addition of
India, New Zealand, and Australia as dialogue partners. A proposed free-trade agreement involving the
16 countries that are members of ASEAN Plus Six formalized these relations through the development of
the Regional Comprehensive Economic Partnership.