Regional Integration Research Paper

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1. Definition

The term ‘regional integration’ refers to the process whereby sovereign nation-states voluntarily establish common institutions for collective governance. This process is multifaceted. At the political level, regional integration involves the creation of supranational institutions, with executive, legislative and judicial powers, and the delegation of policy competences from domestic governance institutions to these institutions. On a legal level, regional integration involves the establishment of a new hierarchy of legal norms, where supranational law is not only an integral part of domestic law (the doctrine of ‘direct effect’) but is also sovereign over domestic law (the doctrine of ‘supremacy’). At the economic level, regional integration involves the development from a common market (in parallel with existing national markets), through a single market (with the removal of barriers to the free circulation of goods, services, capital and labor), to a common or single currency (in parallel with, or replacing, national currencies), and eventually to full economic union (with common macroeconomic and fiscal policies). At the sociological level, regional integration involves the creation of new supranational identities, loyalties, interest groups, and social movements, in addition to and sometimes in opposition to existing national identities, interests, and movements.

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2. The Early Study Of Regional Integration

The first steps towards regional integration occurred in Europe in the immediate aftermath of the Second World War. This led to the establishment of the European Coal and Steel Community (ESRC) in 1952 by six states (Germany, France, Italy, and the Benelux countries), who then created the European Economic Community and the European Atomic Energy Community in 1958. Hence by the end of the 1950s, regional integration was more advanced in Europe than in any other region in the world. Nevertheless, modeled on the European process, inter-state agreements and supranational economic regimes began to emerge in South East Asia, Latin America and North America.

As a result, in the 1950s, the process of regional integration was regarded by most social scientists as a generalizable phenomenon. For example, Karl Deutsch and his colleagues (Deutsch et al. 1957) developed a general ‘transactions theory’ of integration: as cross-border economic and social transactions increase, new regional identities and communities are created, which facilitate new institutions, and so on. The zenith of the early study was the 1970 special issue of the journal International Organization, which tried to develop and test theories that could explain the varying stages of regional integration throughout the world (Lindberg and Scheingold 1971).

3. European Integration: A Sui Generis Phenomenon

However, with the global economic crises in the early 1970s, it became clear that the experiments in regional integration outside Europe were not as deeply entrenched as the process within Western Europe. Ernst Haas, the founding father of ‘regional integration theory,’ consequently proclaimed that the generalizable study of regional integration was now ‘obsolete’ (Haas 1976). From the launch of European integration in the 1950s to the relaunch in the mid-1980s, there have been two dominant explanations of European integration.

3.1 Neofunctionalism

Neofunctionalism was first proposed by Haas (1958) to explain the establishment of the ECSC Treaty, and was developed by his disciples to explain subsequent integration steps. The basic argument of neofunctionalism is that European integration is a deterministic process, whereby ‘a given action, related to a specific goal, creates a situation in which the original goal can be assured only by taking further actions, which in turn create a further condition and a need for more, and so forth’ (Lindberg 1963, p. 9).

This ‘spillover’ process is promoted by two sets of actors. First, at the domestic level, societal and sectional interests promote integration of different policy sectors to achieve political advantage over their opponents or secure benefits already accrued by the integration of other policy sectors. For example, in the 1980s, multinational business interests lobbied for the establishment of a European-wide single market, to secure greater economies of scale and lower transactions costs in cross-border trade. Second, at the European level, the supranational institutions promoted further integration to increase their ability to shape policy outcomes. For example, in the 1960s the European Court of Justice consciously made rulings and established doctrines to promote legal integration in Europe, and in the mid-1980s the European Commission was instrumental in persuading governments to adopt the program for completing the single market.

3.2 Intergovernmentalism

Neofunctionalism’s failure to explain the slowdown of European integration in the 1970s, and the subsequent strengthening of the ‘intergovernmental’ elements of the European Communities, led to the emergence of a starkly opposing theory of European integration, known as intergovernmentalism. In direct contrast with neofunctionalism’s emphasis on nonstate interests at the domestic and supranational levels, intergovernmentalism argues that European integration is driven by the interests and actions of the European nation-states. In this interpretation, the main aim of nation-states is to protect their geopolitical interests, such as national security and ‘sovereignty.’ Also, interstate bargaining is a zero-sum game, where ‘losses are not compensated by gains on other issues: nobody wants to be fooled’ (Hoffmann 1966, p. 882). Consequently, against the neo-functionalist ‘logic of integration,’ intergovernmentalists see a ‘logic of diversity [which] suggests that, in areas of key importance to the national interest, nations prefer the certainty, or the self-controlled uncertainty, of national self-reliance, to the uncontrolled uncertainty of the untested blunder’ (Hoffmann 1966, p. 88). From the intergovernmentalist perspective, then, European integration was relaunched in the mid-1980s because the governments in the large member states shared the same policy preference for a single market and the governments in the periphery states were bought off through ‘side payments,’ such as regional transfers (e.g., Moravcsik 1991).

4. Reintegrating Regional Integration With General Social Science

Ironically, as European integration gathered pace at the end of the 1980s, regional integration began again to be understood as a general phenomenon in social science. There were three main reasons for this shift. First, with the Single European Act in 1987, the establishment of the EU in 1993, and the launch of European economic and monetary union in 1999, European integration began to have a significant impact on domestic political systems and on global political and economic relations. European integration and the EU hence became a major focus of research in a number of social science disciplines.

Second, in the 1990s, the success of the European single market encouraged regional integration in other parts of the world—where governments breathed new life into moribund regional organizations (such as the Association of South East Asian Nations) or created new regional governance regimes (such as the North American Free Trade Area). Once again, regional integration was a general rather than a sui generis phenomenon.

Third, and related to these two aspects, with this renewed interest in the European process came specialization, where scholarship focused on specific aspects of the integration process or the EU rather than on the broad historical development of regional integration. This specialization enabled scholars of European integration to apply general social science theories, e.g., of interstate bargaining, interest group behavior, legislative–judicial interactions, and monetary integration. Specialization consequently increased the subtlety and sophistication of our explanations of regional integration. It also enabled scholars of regional integration to be part of the mainstream study of these cross-systemic social science phenomena. This integration of regional integration and social science occurred in political science, legal studies, economics, and sociology.

4.1 Regional Integration In Political Science

In the International Relations subdiscipline of political science, regional integration is a particular type of supranational regime building between nation-states. For example, in his ‘liberal intergovernmentalist’ (LI) theory of regional integration, Andrew Moravcsik (Moravcsik 1998) deliberately places regional integration at the intersection between the two main approaches in international relations: liberalism and realism. From liberalism, LI argues that state preferences are formed through a process of domestic competition between rival economic interests in society. From realism, LI argues that once state preferences have been formed, states bargain to protect and promote their private interests, and cooperate to design institutions to reduce transactions costs, overcome collective action problems, and establish credible commitments (for example, by delegating agenda-setting and enforcement powers to supranational agents).

In the subdiscipline Comparative Politics, the EU, despite its peculiarity, possesses all the main attributes and processes of a political system. This enables the different elements of regional integration to be explained using general theories from comparative politics (Hix 1999). For example, the EU governments have delegated executive powers to the European Commission, and have designed institutions to control these powers, in the same way that legislative principals delegate to and control the powers of executive agencies in the domestic arena. Similarly, on the ‘inputs’ side of the political system, mass attitudes towards regional integration are shaped by the same utilitarian calculations and affective beliefs as the public show towards domestic institutions. Further, on the ‘outputs’ side, regulation (rather than redistribution) emerged as the central policy instrument of regional integration in parallel with the expansion of regulation and independent regulatory agencies in the domestic arena.

4.2 Regional Integration In Legal Studies

In legal studies, with the establishment of the doctrines of direct effect and supremacy, and the hierarchical relationship between the European Court of Justice and national courts (where national courts apply EU law in the domestic arena), the EU legal system is akin to a federal legal system (Weiler 1991). However, since the German Constitutional Court judgement on the legality of the 1992 Treaty on European Union (the Maastricht Treaty), there is not a clear hierarchy of norms in the EU system. EU law, in its primary form in the EU Treaty and in secondary legislation, is supreme over conflicting domestic statutes and legislation. However, according to the German Constitutional Court and similar constitutional authorities in other member states, EU law remains subservient to basic fundamental rights, as set out in domestic constitutions and the European Convention on Human Rights.

In the intersection between political science and legal studies, the interaction between the EU governments and the European Court of Justice is similar to the interaction between domestic legislative and judicial authorities. On one side, EU governments have delegated judicial power to the European Court of Justice to establish a rule of law, without which there would be little incentive for governments to implement EU legislation. On the other side, protected by the constitutional guarantees in the EU Treaty, the European Court of Justice has pursued the political strategies of many domestic constitutional courts, by reinforcing its legal authority versus lower courts and shaping political outcomes through the policy adjudication process.

4.3 Regional Integration In Economics

In economics, regional economic integration is a particular case of international economics and monetary economics. In international economics, states have liberalized trade to promote comparative advantage and economies of scale. From this perspective, the United States (in the ninteenth century), the European Union, the North American Free Trade Area and the World Trade Organization are all examples of the same phenomenon. In all these cases, the removal of barriers to the free circulation of factors of production was then followed, to a greater or lesser extent, by the creation of common regulations to address market failures, such as unfair competition (through merger rules), asymmetric information in market transactions (through rules on consumer protection), and negative externalities (through rules on environmental protection).

In monetary economics, the process of economic and monetary union in Europe, with the creation of the single currency, has led to the resurrection of the old ‘Optimum Currency Area’ (OCA) theory of monetary unions (Eichengreen and Frieden 1994). In the OCA theory, nations decide to form a monetary union when the benefits of keeping independent exchange rates and interest rates (to address asymmetric demand shocks) are lower than the benefits of establishing a common currency (of lower transactions costs and greater certainty). However, through the empirical and theoretical study of monetary integration in Europe, this theory has been refined to take account of both political and economic calculations, how costs and benefits change with different levels of trade integration, and how different assumptions about the trade-off between inflation and unemployment change these calculations.

4.4 Regional Integration In Sociology

Although to a lesser extent than these other social science disciplines, regional integration has also become an important topic in sociology. For example, Soysal (1994) argues that supranational human rights norms—through the European Convention on Human Rights and the policies of the European Union— were as important as domestic factors in transforming the conception and operation of citizenship norms in Germany and France in the 1980s.


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