Global North Regional Integration model

By Dr Srimal Fernando | Published: 12:31 AM Jun 14 2021
Columns Global North Regional  Integration  model

By Dr Srimal Fernando 

Nations involved in regional integration schemes are often lured by the potential gains from their involvement in regional integration schemes. Even though there is no individual model of integration that can be defined as being more efficient than the other, efficiency in regional integration depends on the background circumstances and the context in which such integration is to take place.  The manner of integration in South Asian nations was initially spearheaded by political motivation. It should be noted, that the idea of a South Asian region is a contemporary concept, which was initiated just a few decades ago. 

The manner in which  South Asian Association for Regional Cooperation (SAARC) is structured in relation to its institutional framework undoubtedly affects its success in the regional integration process. Therefore one can argue that SAARC is a multidimensional organisation both in terms of content and context. In this regard, the modest accomplishments of SAARC leave a vast space for improvement. The inequalities among the numerous economies of the South Asian states which have their origins in the administrative configuration are still to be effectively dealt with.

 The cause for this failing lies somewhere between the absence of a robust commitment to generate a favourable environment. This implores the query as to what the South Asian states and SAARC are doing or rather have failed to do. Thus far, research has indicated that political and economic integration has been anything but successful, particularly in comparison to some of the main regional integration organisations in the globe such as the European Union (EU ) in Europe, the North Atlantic Free Trade Agreement (NAFTA) and other such regional initiatives.

Lessons for Developing Nations from the EU Integration

New regionalism was primarily initiated in Western Europe through initiatives such as the formation of the European Commission. In the backdrop of this new resurgence, regionalism was principally characterized by aspects such as economic interdependence, intra-regional dynamics and the fall of the Western nation-state system. 

The EU integration model is an illustration of an effectively established economic union that can be viewed as an example for other regional integration arrangements throughout the globe, mainly for the developing regions.  Several regions that have tried to imitate the European integration model have been unsuccessful given that these countries lacked the type of economic structures that the EU had during its process of integration.

The developing nations have misinterpreted the progress of European integration as one that was chiefly based on the will to collaborate without giving up their sovereignty.  These developing nations have not been able to recognize the fact that there were several aspects that made the process of European integration successful such as: developed intra-regional trade between Eurozone nations prior to the integration process; existence of complimentary industries; common national interests; trade liberalisation; political will and the ability and readiness of these states to contribute their resources to the integration process. Furthermore, worth recognising is the role-played by other interest groups such as the private sector in the process of integration. 

Both, the state and these interest groups can work in combination to promote the effectiveness in foreign and domestic markets. As means of illustration, all the European states have been able to universally agree to concede their policy making role in macroeconomics to the European Union Central Bank. In the European example, the dynamics behind the integration process was provided by governments of the European nations. 

In addition, there are several other supranational institutions that have been established in the EU such as the EU Parliament and the Court of Justice. It can be seen that the EU is a good example of a flawlessly functioning regional integration arrangement with a well-organised managerial system that administers the union. 

As apparent in the European integration model, national integration initiatives such as coordination committees between ministries of various states and interest groups are vital features for accomplishing successful regional integration. Accordingly, successful integration in South Asia will be contingent on the effective participation of South Asian nations in national integration schemes. It is quite evident that this cannot be accomplished without improving bilateral ties between the nations in South Asia. Hence, when emulating these models and factors, cautiousness should be applied such as taking into consideration the adaptability to pre-existing conditions inside the region.

Regional Integration under the NAFTA in the Americas

 Founded in 1994, NAFTA is a trade agreement between the U.S.A. Canada and Mexico.  The increasing interdependence in the economic and financial sectors provided the drive for broader collaboration with the aim of strengthening the institutional capability of the member states of NAFTA. Notwithstanding the benefits, the challenges faced by Mexico; a country with a small economy when compared to the USA, were manifold when adapting to NAFTA. Cross border trade between NAFTA member states has increased and has been mainly advantageous to Mexico which has made maximum gains from trade harmonization between the three nations.

Nevertheless, NAFTA’s impact can be said to be both beneficial and disadvantageous. In the first instance, it has played a critical role in transforming Mexico’s economy resulting in the country emerging as one of the world’s top exporting nations. It has also resulted in increased foreign direct investment (FDI) inflows to Mexico with the creation of a conducive environment for foreign investment while promoting the diversification of Mexican manufacturing, which was originally over-reliant on oil. 

Nevertheless, the assessment of integration under the NAFTA framework provides practical lessons for the economies in South Asia for their future integration efforts. Yet, it is worth noting that without the commitment of the respective governments in South Asia to bring forward policy reforms and other initiatives related to integration, all the efforts intended for achieving effective regional and economic integration would fail to enhance the region’s economic welfare.

Ability to adapt to changes

 While some of these models of integration have succeeded in promoting regional integration in their individual regions, one should recognise that they were functioning under a distinct context that was adapted to the specific realities of their region. An effective call for integration is required from the regional leaders towards developing strong national strategies with the aim of achieving social, political and economic development in the region.

Dr. Srimal Fernando received his PhD in the area of International Affairs. He was the recipient of the prestigious O. P. Jindal Doctoral Fellowship and SAU Scholarship under the SAARC umbrella. He is also an Advisor/Global Editor of Diplomatic Society for South Africa in partnership with Diplomatic World Institute (Brussels). He has received accolades such as 2018/2019 ‘Best Journalist of the Year’ in South Africa, (GCA) Media Award for 2016 and the Indian Council of World Affairs (ICWA) accolade. He is the author of ‘Politics, Economics and Connectivity: In Search of South Asian Union’)

By Dr Srimal Fernando | Published: 12:31 AM Jun 14 2021

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