Regional Integration in the Global South
By Dr Srimal Fernando
Strengthening cooperation among the South Asian Nations is imperative if the goals of integration is to be achieved. Without South Asian Governments’ commitment to bringing in reformations in policy and other integration-related initiatives, any effort aimed at achieving effective regional and economic integration will fail to increase economic welfare in this region. The doctrine of new regionalism has primarily emphasized on integration in relation to the modern arrangements of trade and investment and also on the role of regional establishments in strengthening economic integration.
Since regional integration is set to promote economic development and can be seen overall as a means to promote the competitive advantage of the small South Asian economies together with the rest of the region, it is vital that the nations in South Asia collaborate with one another to boost regional trade. Overall, trade in South Asia is primarily monopolized by extra-regional trade which has resulted in low levels of intra-regional trade. There remains a solid link between the authorities of regional integration establishments such as South Asian Association for Regional Cooperation (SAARC) and the effective implementation of initiatives on regional integration.
The capacity of regional institutions to have efficient authority in implementation along with the influence over its member nations regarding numerous segments of collaboration can ensure that the integration process is managed by a competent and unbiased institute minus the interference from the various dynamics of national politics. The formation of SAFTA by the SAARC member nations is an encouraging step towards removing trade barriers and promoting economic growth in the region. The SAFTA agreement is projected to pave the way for improved trade flows amongst SAARC member states. Therefore, South Asia’s successful integration will depend on the effective participation in national integration schemes by the nations in South Asia as can be seen in the Association of Southeast Asian Nations (ASEAN ) integration model or in the Latin American states.
Southeast Asia’s Experience: ASEAN – AFTA
The primary aim of creating AFTA as viewed by numerous experts is to boost the competitive advantage of South East Asian exports rather than creating a market internally. Debatably, ASEAN Free Trade Area (AFTA) has led to the advancement of noteworthy justification of the production activities of multilateral corporations that export to the outside world rather than within the region.
This indicates that the accomplishment of regional integration in the ASEAN model cannot be measured by the quantity of intra-regional trade. Since the 1990s, China’s emergence as an international economic power has impacted ASEAN in numerous ways. The emergence of china has not only resulted in the redirection of FDI inflows from South East Asia to China but has also led towards China taking over the region’s export market. This has led ASEAN to comprehend the significance of fast-tracking AFTA’s initiatives intended to create a single market economy in the region that would attract additional FDI inflows.
Lessons from Latin America and its import substitution initiatives
The Latin American nations regarded import substitution and efficient economic planning as a mode of empowering their developing economies to compete with developed and industrialized economies. As early as in the 1930s, numerous Latin American countries had been engaged in import substitution initiatives. Similar to the rest of the developing regions across the globe, arrangements to regionally integrate the Latin American states is a contemporary phenomenon. The Latin American states formally became involved in integration arrangements in the early 1960s and 1970s, mainly through import substitution schemes.
In the recent years, the Latin American nations have re-initiated attempts intended to promote economic integration among its involved nations. The notion of forming a wider common market for Latin American states has been led by the United Nations Economic Commission for Latin America. To this effect, these initiatives led to the establishment of regional trade groupings such as the Latin American Free Trade Association (LAFTA) and the Central American Common Market (CACM). The member states of LAFTA included all the ten South American nations and the Central American Common Market (CACM) which was made up of five signatory nations from Central America. The primary approach used by LAFTA member states in their negotiating structure was protectionism.
The South Asian Economic Union (SAEU)
The possibility of forming a South Asian Union (SAU) would be through politics, economics and connectivity. If established, such a union would create a regional environment that is considerably desirable for the prosperity of South Asian nations. The existing status of the South Asian region has been influenced by many historical dynamics which in turn have shaped SAARC’s approach to regionalism. However, succeeding efforts at forming a South Asian Economic Union (SAEU) had faced several challenges such as non-tariff barriers, poor regional infrastructure and strained bilateral relations between member states among others. Nevertheless, the initiatives taken towards establishing a SAEU is a strong indication of the inclination of South Asian nations to further strengthen regional economic integration.
The proposal and the theoretical framework to form a SAEU were made during the 18th SAARC summit. The proposals were made by the SAARC Secretariat and prepared by the Asian Development Bank (ADB) . Establishing a SAEU would provide the economies of South Asia a strong basis to gradually transform the region into the South Asian Economic Union, thereby enabling the exploitation of the massive opportunities available in the region. In order for the South Asian states to effectively transform into the South Asian Economic Union, their economies should study the integration experiences of other regions across the globe that have been able to successfully maneuver the numerous stages of economic integration.
Planning For Further Integration
In the modern world, numerous nations have managed to utilize the element of trade not only to stimulate growth and development but also to promote the prosperity of its people. This has been apparent predominantly among the developing nations. As a matter of fact, no nation has been able to adequately develop its economy without trade. Nevertheless, the degree to which trade contributes to social and economic development depends on the goals that were initially established and their level of achievement. SAARC and its eight-member regional grouping have undeniably quite seriously taken the role of consolidation the SAARC mandate through regional collaboration. The South Asian region is seen to have unexploited economic prospects. As the impetus for regional integration continues to increase worldwide, the eight South Asian states are becoming progressively invested in enhancing collaboration in the region in order to accomplish successful economic growth.
(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’)