Theoretical Perspectives: Constructing an Analytical Framework

  • Kevin G. Cai
Part of the International Political Economy Series book series (IPES)


Scholars have developed a number of theories to explain economic regionalism in the postwar years. While the existing theories provide some intellectual insights on economic regionalism in one respect or the other, they could hardly explain a unique process and pattern of regional economic integration in East Asia that has developed since the mid-1980s. The analytical framework that is developed in this chapter is intended to explore economic regionalism in the world economy in general and regional economic integration in East Asia in particular. While the overall structure of this analytical framework is seminal, the approach is built on the basis of many insightful thoughts of contemporary international political economy theories with respect to economic regionalism, incorporating global (structural), regional and national factors into a unified analytical framework.1 As such, a review of major theoretic perspectives on economic regionalism is useful.


Economic Regionalism Custom Union North American Free Trade Agreement Political Trust Trade Diversion 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. 1.
    A similar approach is implied in the analysis of regionalism by Mario Telo in his edited volume. See M. Telo, “Introduction: Globalization, New Regionalism and the Role of the European Union,” in M. Telo (ed.), European Union and New Regionalism: Regional Actors and Global Governance in a Post-Hegemonic Era, 2nd edition (Aldershot, England and Burlington, VT: Ashgate Publishing, 2007), pp.1–18.Google Scholar
  2. 2.
    D. Mitrany, A Working Peace System (Chicago: Quadrangle, 1966).Google Scholar
  3. 3.
    C. C. Pentland, “Integration, Interdependence, and Institutions: Approaches to International Order,” in D. G. Haglund and M. K. Hawes (eds), World Politics: Power, Interdependence & Dependence (Toronto: Harcourt Brace Jovanovich Canada, Inc., 1990), pp.181–2.Google Scholar
  4. 4.
    The notions of high politics and low politics were first given by Stanley Hoffmann in 1963: high politics refers to issues of war and peace in world politics, while low politics implies economic and welfare issues in international relations. S. Hoffmann, “Discord in Community: The North Atlantic Area as a Partial International System,” International Organization, vol.17, no.3 (1963) 521–49.CrossRefGoogle Scholar
  5. 6.
    E. B. Haas, The Obsolescence of Regional Integration Theory (Berkeley, CA: Institute of International Studies, University of California, 1975), pp.9–11.Google Scholar
  6. 7.
    See J. S. Nye, Peace in Parts: Integration and Conflict in Regional Organization (Boston: Little, Brown, 1971).Google Scholar
  7. 12.
    In fact, Nye himself is identified as a neofunctionalist by many authors. See, for example, J. E. Dougherty and R. L. Pfaltzgraff, Contending Theories of International Relations: A Comprehensive Survey (New York: Harper & Row, 1990), pp. 442–6.Google Scholar
  8. 13.
    J. Viner, The Customs Union Issue (New York: Carnegie Endowment for International Peace, 1950). This book has now become a classical work of customs union theory. For more discussions of the development of the customs union theory, see the survey articles by R. G. Lipsey, “The Theory of Customs Unions: A General Survey,” Economic Journal, no.70 (1960) 496–513;Google Scholar
  9. M. B. Krauss, “Recent Developments in Customs Union Theory: An Interpretive Survey,” Journal of Economic Literature, vol.10, nos.1–2 (1972) 413–36;Google Scholar
  10. A. Hazlewood, “Customs Unions,” entry in The New Palgrave: A Dictionary of Economics (New York: Stockton Press, 1987), pp.743–4;Google Scholar
  11. and F. R. Gunter, “Customs Union Theory: Retrospect and Prospect,” in D. Greenaway, T. Hyclak and R. J. Thornton (eds), Economic Aspects of Regional Trading Arrangements (New York: Harvester Wheatsheaf, 1989), pp. 1–30.Google Scholar
  12. 14.
    F. Gehrels, “Customs Union from a Single Country Viewpoint,” The Review of Economic Studies, vol. 24 (1956) 61–4.CrossRefGoogle Scholar
  13. 15.
    R. G. Lipsey, “The Theory of Customs Unions: Trade Diversion and Welfare,” Economica, N.S., vol.24, no.93 (1957) 44–6.CrossRefGoogle Scholar
  14. 16.
    P. Collier, “The Welfare Effects of Customs Unions: An Anatomy,” Economic Journal, vol.89 (1979) 84–5.CrossRefGoogle Scholar
  15. 19.
    C. A. Cooper and B. F. Massell, “Toward a General Theory of Customs Unions for Developing Countries,” Journal of Political Economy, vol.73 (1965) 461–76; and “A New Look at Customs Unions Theory,” Economic Journal, vol.75 (1965) 742–7.CrossRefGoogle Scholar
  16. 20.
    H. G. Johnson, “An Economic Theory of Protectionism, Tariff Bargaining and the Formation of Customs Unions,” Journal of Political Economy, vol.73 (1965) 256–83.CrossRefGoogle Scholar
  17. 22.
    G. Floystad, “Non Discriminating Tariffs, Custom Unions, and Free Trade,” Kyklos, vol.28 (1975) 641–4.CrossRefGoogle Scholar
  18. 23.
    R. Dauphin, The Impact of Free Trade in Canada (Ottawa: Economic Council of Canada, 1978).Google Scholar
  19. 24.
    E. Berglas, “Preferential Trading Theory: The n Commodity Case,” Journal of Political Economy, vol.87 (1979) 315–31.CrossRefGoogle Scholar
  20. 30.
    A. O. Hirschman, “Three Uses of Political Economy in Analyzing European Integration,” in A. O. Hirschman, Essays in Trespassing (Cambridge: Cambridge University Press, 1981), pp.266–84.Google Scholar
  21. 31.
    M. Marrese and J. Vanous, Soviet Subsidization of Trade with Eastern Europe (Berkeley, CA: Institute of International Studies, 1983).Google Scholar
  22. 32.
    For a comprehensive treatment of the theoretical aspects of economic nationalism, see M. A. Heilperin, Studies in Economic Nationalism (Geneva: Publications of the Graduate Institute of International Studies, 1962); for a discussion of the contending explanations of economic nationalism,Google Scholar
  23. see A. D. Smith, Theories of Nationalism, 2nd edition (New York: Holmes & Meier, 1983);Google Scholar
  24. also see P. L. Burnell, Economic Nationalism in the Third World (Brighton, Sussex: Wheatsheaf Books Ltd., 1986), pp.16 and 26;Google Scholar
  25. R. Gilpin, The Political Economy of International Relations (Princeton, NJ: Princeton University Press, 1987), p.31.Google Scholar
  26. 33.
    O. Hieronymi, “The New Economic Nationalism,” in O. Hieronymi (ed.), The New Economic Nationalism (London: Macmillan, 1980), p.12.Google Scholar
  27. 36.
    Benjamin Cohen distinguishes “malign nationalism,” the pursuit of national self-interest even at the risk of provoking instability in the international economic system, from “benign nationalism” that accepts and upholds the linkage between national interest and international stability, even though national priorities might have to be compromised. See B. J. Cohen, “United States Monetary Policy and Economic Nationalism,” in O. Hieronymi (ed.), The New Economic Nationalism (London: Macmillan, 1980), p.52. Gilpin also uses the same terminology, see Gilpin, The Political Economy of International Relations, p.32.Google Scholar
  28. 37.
    See H. G. Johnson, “Mercantilism: Past, Present, Future,” in H. G. Johnson (ed.), The New Mercantilism: Some Problems in International Trade, Money and Investment (Oxford: Basil Blackwell, 1974), pp.3–4;Google Scholar
  29. also G. Macesich, Economic Nationalism and Stability (New York: Praeger, 1985), p.28.Google Scholar
  30. 38.
    Thomas Mun, a director of the East India Trading Company and one of the best-known 17th-century English mercantilist authors, explained the significance of the balance of payments in his England’s Treasure by Foreign Trade (Garden City, NY: Doubleday, 1953). For discussions of mercantilism, see also L. L. Snyder, The Meaning of Nationalism (New Brunswick, NY: Rutgers University Press, 1954), p.138.Google Scholar
  31. 40.
    D. Seers, The Political Economy of Nationalism (Oxford: Oxford University Press, 1983), p.52;Google Scholar
  32. H. G. Johnson (ed.), Economic Nationalism in Old and New States (Chicago: The University of Chicago Press, 1967).Google Scholar
  33. 43.
    The leading works of classical liberalism include: Adam Smith (Wealth of Nations, 1776), Herbert Spencer (The Man Versus the State, 1892),Google Scholar
  34. Friedrich A. Hayek (Constitution of Liberty, 1960),Google Scholar
  35. Ludwig von Mises (Liberalism: A Socio-Economic Exposition, 1962),Google Scholar
  36. and Milton Friedman (Capitalism and Freedom, 1960).Google Scholar
  37. 44.
    Among the leading works within neoliberalism are: Jeremy Bentham (The Principles of Morals and Legislation, 1848),Google Scholar
  38. John Stuart Mill (Principles of Political Economy with Some Social Applications, 1848),Google Scholar
  39. T. H. Green (Lectures on the Principles of Political Obligation, 1895),Google Scholar
  40. Alfred Marshall (Principles of Economics, 1890),Google Scholar
  41. John Dewey (Liberalism and Social Action, 1935),Google Scholar
  42. and John Maynard Keynes (Essays in Persuasion, 1931).Google Scholar
  43. 45.
    R. N. Cooper, The Economics of Interdependence; Economic Policy in the Atlantic Community (New York: McGraw Hill, 1968, published for the Council on Foreign Relations).Google Scholar
  44. 46.
    R. O. Keohane and J. S. Nye, Power and Interdependence, 2nd edition (Glenview, IL; Boston; London: Scott, Foresman and Company, 1989), pp.24–9.Google Scholar
  45. 47.
    K. N. Waltz, Theory of International Politics (New York: McGraw-Hill, Inc., 1979), p.144.Google Scholar
  46. 49.
    C. P. Kindleberger, “Dominance and Leadership in the International Economy: Exploitation, Public Goods, and Free Rides,” International Studies Quarterly, vol.25 (1981) 243.CrossRefGoogle Scholar
  47. 50.
    R. Jervis, “Security Regimes,” International Organization, vol.36 (1982) 357–78.CrossRefGoogle Scholar
  48. 52.
    The theory of hegemonic stability was initially developed by Charles P. Kindleberger, see C. P. Kindleberger, The World in Depression, 1929–1939 (Berkeley, CA: University of California Press, 1973 and 1986).Google Scholar
  49. Other works on the theory of hegemonic stability include: R. Gilpin, U.S. Power and the Multinational Corporation: The Political Economy of Foreign Direct Investment (New York: Basic Books, 1975) and The Political Economy of International Relations, pp.72–80;Google Scholar
  50. S. D. Krasner, “State Power and the Structure of International Trade,” World Politics, vol.28, no.3 (1976), 317–47;CrossRefGoogle Scholar
  51. R. O. Keohane, “The Theory of Hegemonic Stability and Changes in International Economic Regimes, 1967–1977,” in O. R. Holsti, R. M. Siverson and A. L. George (eds), Change in the International System (Boulder, CO: Westview Press, Inc., 1980), pp.131–62;Google Scholar
  52. R. O. Keohane, After Hegemony: Cooperation and Discord in the World Political Economy (Princeton, NJ: Princeton University Press, 1984 and 2004 with a new Preface);Google Scholar
  53. M. Olson, The Rise and Decline of Nations (New Haven and London: Yale University Press, 1982);Google Scholar
  54. A. A. Stein, “The Hegemons Dilemma: Great Britain, the United States, and the International Economic Order,” International Organization, vol.38, no.2 (1984) 355–86;CrossRefGoogle Scholar
  55. S. Strange, “The Persistent Myth of Lost Hegemony,” International Organization, vol.41, no.4 (1987) 551–74.CrossRefGoogle Scholar
  56. 53.
    B. Frey, International Political Economics (New York: Basil Blackwell, 1984), ch.7.Google Scholar
  57. 54.
    D. Snidal, “The Limits of Hegemonic Stability Theory,” International Organization, vol.39, no.4 (1985) 579–614.CrossRefGoogle Scholar
  58. 55.
    P. J. Katzenstein, “International Relations and Domestic Structures: Foreign Economic Polices of Advanced Industrial States,” International Organization, vol.30, no.1 (1976) 1–45;CrossRefGoogle Scholar
  59. J. G. Ruggie, “International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order,” International Organization, vol.36, no.2 (1982) 379–415.CrossRefGoogle Scholar
  60. 57.
    N. Frohlich, J. A. Oppenheimer and O. R. Young, Political Leadership and Collective Goods (Princeton, NJ: Princeton University Press, 1971).Google Scholar
  61. 59.
    Gilpin, ibid.; for detailed discussion of these conditions, see R. Gilpin, War & Change in World Politics (Cambridge and New York: Cambridge University Press, 1981), ch.3.CrossRefGoogle Scholar
  62. 60.
    S. D. Krasner, “Structural Causes and Regime Consequences: Regimes as Intervening Variables,” in S. D. Krasner (ed.), International Regimes (Ithaca, NY: Cornell University Press, 1983), p.2.Google Scholar
  63. 61.
    R. O. Keohane, “The Demand for International Regime,” International Organization, vol.36, no.2 (1982) 354.CrossRefGoogle Scholar
  64. 64.
    C. P. Kindleberger, Economic Response: Comparative Studies in Trade, Finance, and Growth (Cambridge, MA: Harvard University Press, 1978), ch.3.CrossRefGoogle Scholar
  65. 65.
    For a discussion of the forces that cause the decline of a hegemon, see Gilpin, The Political Economy of International Relations, pp.77–8. In so far as liberal conditions are viewed as contributing to the erosion of the primacy of the hegemon in the postwar system, some theorists, liberal and others, note that liberal orders tend to self-destruct. These arguments are reviewed in D. Sylvan, “The Newest Mercantilism,” International Organization, vol.35, no.2 (1981) 375–9.CrossRefGoogle Scholar
  66. These arguments are reviewed in D. Sylvan, “The Newest Mercantilism,” International Organization, vol.35, no.2 (1981) 375–9.CrossRefGoogle Scholar
  67. 68.
    E. B. Haas, “Why Collaborate? Issue-Linkage and International Regimes,” World Politics, vol.32 (1980) 357–405.CrossRefGoogle Scholar
  68. 70.
    See S. Kuznets, Economic Growth of Nations: Total Output and Production Structure (Cambridge, MA: The Belknap Press of Harvard University, 1971).CrossRefGoogle Scholar
  69. 72.
    V. I. Lenin, The Development of Capitalism in Russia: The Process of the Formation of a Home Market for Large-scale Industry (Moscow: Foreign Language Publishing Housing, 1956).Google Scholar
  70. 73.
    P. A. Baran, The Political Economy of Growth (New York: Monthly Review Press, 1957).Google Scholar
  71. 74.
    R. Prebisch, “Commercial Policy in the Underdeveloped Countries,” American Economic Review, vol.49 (May 1959) 251–73.Google Scholar
  72. 77.
    B. J. Cohen, “The Political Economy of International Trade,” International Organization, vol.44, no.2 (1990) 274.CrossRefGoogle Scholar
  73. 78.
    R. Gilpin, “Three Models of the Future,” International Organization, vol.29, no.1 (1975) 37.CrossRefGoogle Scholar
  74. 79.
    C. F. Bergsten, R. O. Keohane and J. S. Nye, “International Economics and International Politics: A Framework for Analysis,” International Organization, vol.29, no.1 (1975) 19–20.Google Scholar
  75. 81.
    K. N. Waltz, Man, the State and War (New York: Columbia University Press, 1959).Google Scholar
  76. 86.
    For a discussion on controversy over the definition of regionalism, see E. D. Mansfield and H. V. Milner, “The New Wave of Regionalism,” International Organization, vol.53, no.3 (1999) 590–2.CrossRefGoogle Scholar
  77. 88.
    For studies of soft and open regionalism, see, for example, A. Elek, “Trade Policy Options for the Asia Pacific Region in the 1990s: the Potential of Open Regionalism,” American Economic Review, vol.82, no.2 (1992) 74–8;Google Scholar
  78. P. J. Katzenstein, “Introduction: Asian Regionalism in Comparative Perspective,” in P. J. Katzenstein and T. Shiraishi (eds), Network Power: Japan and Asia (Ithaca, NY: Cornell University Press, 1997) pp.1–44;Google Scholar
  79. S-J Wei and J. A. Frankel, “Open versus Closed Trade Blocs,” in T. Ito and A. O. Krueger (eds), Regionalism versus Multilateral Trade Arrangements (Chicago: The University of Chicago Press, 1997), pp.119–39;Google Scholar
  80. and I. Yamazawa, “On Pacific Economic Integration,” The Economic Journal, vol.102 (1992) 1519–29.CrossRefGoogle Scholar
  81. 90.
    For a discussion on dispute-settlement mechanisms, see B. V. Yarbrough and R. M. Yarbrough, “Dispute Settlement in International Trade: Regionalism and Procedural Coordination,” in E. D. Mansfield and H. V. Milner (eds), The Political Economy of Regionalism (New York: Columbia University Press, 1997), pp.134–63.Google Scholar
  82. 93.
    As Jagdish Bhagwati aptly points out, “GATT’s (unconditional) MFN is universal only for its members, so it falls short of total universalism. But the important point to remember is that the GATT is open to membership to all who meet the criteria for admission and has generally been inclusive rather than exclusive.” J. Bhagwati, “Regionalism and Multilateralism: An Overview,” in J. de Melo and A. Panagariya (eds), New Dimensions in Regional Integration (Cambridge and New York: Cambridge University Press, 1993), p.46, note 2.Google Scholar
  83. 96.
    The discussion of the four assumptions here fits with Mario Bunge’s concept of “systemism.” See M. Bunge, Finding Philosophy in Social Science (New Haven: Yale University Press, 1996), pp.264–81.Google Scholar
  84. 99.
    See, for example, R. Gilpin, U.S. Power and Multilateral Corporations, The Political Economy of International Relations, and Global Political Economy: Understanding the International Economic Order (Princeton, NJ: Princeton University Press, 2001); Kindleberger, The World in Depression, 1929–1939; and Krasner, “State Power and the Structure of International Trade.”Google Scholar
  85. 102.
    See, for example, K. G. Cai, “The Political Economy of Economic Regionalism in Northeast Asia: A Unique and Dynamic Pattern,” East Asia: An International Quarterly, vol.17, no.2 (1999) 6–46;CrossRefGoogle Scholar
  86. Katzenstein, “Introduction: Asian Regionalism in Comparative Perspective”; and J. J. Nogués and R. Quintanilla, “Latin America’s Integration and the Multilateral Trading system,” in J. de Melo and A. Panagariya (eds), New Dimensions in Regional Integration (Cambridge and New York: Cambridge University Press, 1993), p.285.Google Scholar

Copyright information

© Kevin G. Cai 2010

Authors and Affiliations

  • Kevin G. Cai

There are no affiliations available

Personalised recommendations