Abstract
Since the end of the Cold War, economic integration accords have proliferated. In a type of integration “arms race,” virtually every world region—regardless of economic development, government type, or culture—boasts of at least a few loosely specified accords. However, for analytical purposes, these accords cannot be lumped into a single category of “integration,” any more than we can combine global integration under the World Trade Organization (WTO), with its 153 members, with small regional accords that can have as few as two members.
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Notes
Scott Cooper, “Why Doesn’t Regional Monetary Cooperation Follow Trade Cooperation?” Review of International Political Economy 14, no. 4 (2007): 626–52. Cooper is not counting by depth, but rather by the number of members. Under this counting rule, he finds there are 30 trade agreements with three or more members.
Many scholars have written about this history. Two prominent examples on trade and money, respectively, are Richard N. Rosecrance, The Rise of the Trading State: Commerce and Conquest in the Modern World (New York: Basic Books, 1986);
and Eric Helleiner, The Making of National Money: Territorial Currencies in Historical Perspective (Ithaca: Cornell University Press, 2003).
Francesco Duina, The Social Construction of Free Trade: The European Union, NAFTA, and Mercosur (Princeton: Princeton University Press, 2006), 3.
Joakim Reiter, “The EU-Mexico Free Trade Agreement: Assessing the EU Approach to Regulatory Issues,” in Regionalism, Multilateralism and Economic Integration: The Recent Experience, ed. Gary P. Sampson and Stephen Woolcock (Tokyo, New York, and Paris: United Nations University Press, 2003).
Agata Antkiewicz and John Whalley, “China’s New Regional Trade Agreements,” World Economy 28, no. 10 (2005).
Bela A. Balassa, The Theory of Economic Integration (Homewood, IL: RD. Irwin, 1961).
Dominick Salvatore, International Economics (John Wiley & Sons, Inc., 2004), 321.
On types of monetary integration, see Benjamin J. Cohen, The Future of Money (Princeton, NJ: Princeton University Press, 2004), The Geography of Money (Ithaca: Cornell University Press, 1998); and “The Political Economy of Currency Regions,” in The Political Economy of Regionalism, ed. Edward D. Mansfield and Helen V. Milner (New York: Columbia University Press, 1997).
Benjamin J. Cohen, “Monetary Governance in a World of Regional Currencies,” in Governance in a Global Economy, ed. Miles Kahler and David A. Lake (Princeton, NJ: Princeton University Press, 2003), 139.
These percentages include all foreign currencies. Tatna Sahay and Carlos A. Végh, “Dollarization in Transition Economies: Evidence and Policy Implications,” in The Macroeconomics of International Currencies: Theory, Policy and Evidence, ed. Paul Mizen and Eric J. Pentecost (Cheltenham, UK: Edward Elgar, 1999).
Andrea Bubula and Inci Otker-Robe, “Are Pegged and Intermediate Exchange Rate Regimes More Crisis Prone?” in IMF Working Paper, WP/03/223 (Washington, D.C.: International Monetary Fund, 2003).
Rupa Duttagupta and Inci Okter-Robe, “Exits from Pegged Regimes: An Empirical Analysis,” in IMF Working Paper, WP/03/147 (Washington, D.C.: International Monetary Fund, 2003).
Andrea Bubula and Inci Otker-Robe, “The Evolution of Exchange Rate Regimes since 1990: Evidence from De Facto Policies,” in IMF Working Paper, WP/02/155 (Washington, D.C.: International Monetary Fund, 2002).
For a complete list of dollarized cases, see Ibid., 121–23. For other studies focused on dollarization, see Dominick Salvatore, James W. Dean, and Thomas D. Willett, eds., The Dollarization Debate (Oxford: Oxford University Press, 2003);
Sahay and Végh, “Dollarization in Transition Economies”; Edward B. Flowers and Francis A. Lees, The Euro, Capital Markets, and Dollarization (Lanham, MD: Rowman & Littlefield Publishers, 2002); S. H. Hanke, “On Dollarization and Currency Boards: Error and Deception,” Journal of Policy Reform 5, no. 4 (2002);
Eduardo Levy Yeyati and Federico Sturzenegger, eds., Dollarization (Cambridge, MA, and London: The MIT Press, 2003); and J. L. Moreno-Villalaz, “Lessons from the Monetary Experience of Panama: A Dollar Economy with Financial Integration,” Cato Journal 18, no. 3 (1999).
Adrian Saville, Maureen Bader, and Zane Spindler, “Alternative Monetary Systems and the Quest for Stability: Can a Free Banking System Deliver in South Africa?,” South African Journal of Economics 73, no. 4 (2005): 683.
The Comoros Islands in the Indian Ocean are an exception. Although members of the Franc zone, the states also have a national currency and bank. Since gaining their independence, the African states renamed the currency, but were careful to keep the CFA acronym. It now represents two names (one for each region of the CFA zone): Communauté Financière d’Afrique, and Coopération Financière en Afrique Centrale. David Stasavage, The Political Economy of a Common Currency: The CFA Franc Zone since 1945 (Ashgate, 2003); and Cohen, Future of Money, 43.
John S. Chipman, “A Survey of the Theory of International Trade: Part 1, the Classical Theory,” Econometrica 33, no. 3 (1965): 479.
For a summary of these economic arguments, see Walter Mattli, The Logic of Regional Integration: Europe and Beyond (Cambridge and New York: Cambridge University Press, 1999).
For the original theories of absolute and comparative advantage, see Adam Smith, The Wealth of Nations (New York: The Modern Library, 1937);
and David Ricardo, The Principles of Political Economy and Taxation (Homewood, IL: Irwin Publishing, 1963).
For expositions of the classical theory of comparative advantage, see Gottfried Haberler, The Theory of International Trade (London: W. Hodge & Co., 1936);
Jacob Viner, Studies in the Theory of International Trade (New York: Harper & Brothers, 1937); Jagdish Bhagwati, “The Pure Theory of International Trade: A Survey,” Economic Journal 74, no. 293 (1964); and Chipman, “A Survey of the Theory of International Trade.”
For a review of neoclassical and modern theory, see John S. Chipman, “A Survey of the Theory of International Trade: Part 2, the Neo-Classical Theory,” Econometrica 33, no. 4 (1965);
Ronald Winthrop Jones and J. Peter Neary, “The Positive Theory of International Trade,” in Handbook of International Economics, ed. Ronald Winthrop Jones and Peter B. Kenen (Amsterdam and New York: North-Holland, 1984);
and John S. Chipman, “A Survey of the Theory of International Trade: Part 3, the Modern Theory,” Econometrica 34, no. 1 (1965). Modern economic theory is generally associated with Heckscher-Ohlin’s factor endowments theory and the follow-on Stolper-Samuelson.
For the original contributions, see Bertil Gotthard Ohlin, Interregional and International Trade, Rev. ed., Harvard Economic Studies; V. 39 (Cambridge, MA: Harvard University Press, 1968);
Eli F. Heckschler, “The Effect of Foreign Trade on the Distribution of Income,” in Readings in the Theory of International Trade, ed. Howard Sylvester Ellis and Lloyd A. Metzler (Homewood, IL,: R.D. Irwin, 1950);
and Wolfgang F. Stolper and Paul A. Samuelson, “Protection and Real Wages,” The Review of Economic Studies 9, no. 1 (1941).
Sidney Weintraub, “Lessons from Chile and Singapore Free Trade Agreements,” in Free Trade Agreements: U.S. Strategies and Priorities, ed. Jeffrey J. Schott (Washington, D.C.: Institute of International Economics, 2004).
Jeffrey J. Schott, “Assessing US FTA Policy,” in Free Trade Agreements: U.S. Strategies and Priorities, ed. Jeffrey J. Schott (Washington, D.C.: Institute of International Economics, 2004), 12.
Stephan Haggard, “Regionalism in Asia and the Americas,” in The Political Economy of Regionalism, ed. Edward D. Mansfield and Helen V. Milner (New York: Columbia University Press, 1997), 25.
J. Clark Leith and John Whalley, “Competitive Liberalization and the US-SACU FTA,” in Free Trade Agreements: U.S. Strategies and Priorities, ed. Jeffrey J. Schott (Washington, D.C.: Institute of International Economics, 2004), 335–36.
Jacob Viner, The Customs Union Issue (New York: The Carnegie Endowment for International Peace, 1950);
James E. Meade, The Theory of Customs Union (Amsterdam: North-Holland, 1955);
Richard Lipsey and Kelvin Lancaster, “The General Theory of the Second Best,” Review of Economic Studies 24, no. 1 (1956); and Richard Lipsey, “The Theory of Customs Unions: A General Survey,” The Economic Journal 70, no. 279 (1960).
Mona M. Lyne, The Voter’s Dilemma and Democratic Accountabilty: Latin America and Beyond (University Park, PA: Penn State University Press, 2008);
and Bruce Bueno de Mesquita et al., The Logic of Political Survival (Cambridge, MA, and London: The MIT Press, 2003).
Colin McCarthy, “The Southern African Customs Union in Transition,” African Affairs 102 (2003): 608.
Robert A. Mundell, “A Theory of Optimum Currency Areas,” American Economic Review 51, no. 3(1961);
Ronald I. McKinnon, “Optimum Currency Areas,” American Economic Review 53, no. 9 (1963);
and Peter B. Kenen, “The Theory of Optimum Currency Areas: An Eclectic View,” in Monetary Problems of the International Economy, ed. Robert A. Mundell and Alexander K. Swoboda (Chicago: University of Chicago Press, 1969).
James Gwartney, Kurt Schuler, and Robert Stein, “Achieving Monetary Stability at Home and Abroad,” Cato Journal 21, no. 2 (2001): 196.
Tamim Bayoumi and Barry Eichengreen, “Shocking Aspects of European Monetary Integration,” in Adjustment and Growth in the European Monetary Union, ed. Francisco S. Torres and Francesco Giavazzi (Cambridge, UK, and New York: Cambridge University Press, 1993).
José M. Salazar-Xirinachs and Jaime Granados, “The US-Central America Free Trade Agreement: Opportunities and Challenges,” in Free Trade Agreements: U.S. Strategies and Priorities, ed. Jeffrey J. Schott (Washington, D.C.: Institute of International Economics, 2004), 232;
and Inbom Choi and Jeffrey J. Schott, “Korea-US Free Trade Revisited,” in Free Trade Agreements: U.S. Strategies and Priorities, ed. Jeffrey J. Schott (Washington, D.C.: Institute of International Economics, 2004), 187–88.
Dean A. DeRosa, “US Free Trade Agreements with Asean,” in Free Trade Agreements: U.S. Strategies and Priorities, ed. Jeffrey J. Schott (Washington, D.C.: Institute of International Economics, 2004), 166–67.
Andrew L. Stoler, “Australia-US Free Trade: Benefits and Costs of an Agreement,” in Free Trade Agreements: U.S. Strategies and Priorities, ed. Jeffrey J. Schott (Washington, D.C.: Institute of International Economics, 2004), 96;
and Howard Rosen, “Free Trade Agreements as Foreign Policy Tools: The US-Israel and US-Jordan FTAs,” in Free Trade Agreements: U.S. Strategies and Priorities, ed. Jeffrey J. Schott (Washington, D.C.: Institute of International Economics, 2004), 52–53.
Edward D. Mansfield, “Effects of International Politics on Regionalism in International Trade,” in Regional Integration and the Global Trading System, ed. Kym Anderson and Richard Blackhurst (London: Harvester Wheatsheaf, 1993);
and Joanne Gowa, Allies, Adversaries, and International Trade (Princeton, NJ: Princeton University Press, 1994).
Ronald Rogowski, “Political Cleavages and Changing Exposure to Trade,” American Political Science Review 81, no. 4 (1987).
Robert Z. Lawrence, Regionalism, Multilateralism, and Deeper Integration, Integration National Economies Series (Washington, D.C.: Brookings Institution, 1996), 10.
For an explanation that adheres closely to the principal-agent model, arguing that supranational structures as rationally designed to meet state interests, see Mark A. Pollack, The Engines of European Integration : Delegation, Agency, and Agenda Setting in the EU (Oxford and New York: Oxford University Press, 2003).
For an alternative explanation that focuses on the myopia of political leaders, see Paul Pierson, “The Path to European Integration: A Historical Institutionalist Analysis,” Comparative Political Studies 29, no. 2 (1996).
Finn Laursen, ed. Comparative Regional Integration: Theoretical Perspectives (Hampshire, UK, and Burlington, VT: Ashgate, 2003).
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© 2009 Kathleen J. Hancock
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Hancock, K.J. (2009). How and Why States Economically Integrate. In: Regional Integration. Palgrave Macmillan, New York. https://doi.org/10.1057/9780230101913_2
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DOI: https://doi.org/10.1057/9780230101913_2
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