Why Has Regionalism Become Such a Popular Strategy to Cope with Globalization - Essay Example

Table of Contents Introduction 02 Regionalism and Globalisation 02 Relation between Regionalism and Globalisation 03 Benefits of Regionalism 04 Regionalism and the end of Cold War 05 Conclusion 07 References 08 Introduction Globalisation is a big step taken in the direction to improve the business amongst countries beyond their geographical boundaries and regionalism has supported that step by providing integration between regions for economic harmony. After the Cold War regionalism has turned out to be a very useful strategy to cope up with globalisation. Both these two processes are not very different from one another and they go hand in hand for increased communication and trade. In this assignment we come across the meaning of regionalism and globalisation and the relationship between the two. We further study the benefits of regionalism, in context to globalisation, highlighting both the economic and noneconomic benefits. We study the evolution and added benefits of regionalism at the end of the Cold War. Regionalism has backed the setting up of trade zones like the EU which benefits the member countries or states, with regional integration, to set up their own framework for business. Regionalism and Globalisation Regionalism is the practice of regional instead of the central system of administration or economic, cultural or political affiliation. It is a process occurring in a given geographical region for economic, cultural, scientific, diplomatic, political and military personnel share certain fundamental values and norms. The impact of regional organisations can be easily felt in every corner of the world. With the development of fascinating institutions in recent years has given momentum to regional integration projects and showing certain impact on the lives of millions. Globalisation is the process of interaction between the people, companies and government of two different countries through international trade and investment. The process of globalisation has affected the environment, culture, political system, economic development and prosperity in different societies around the globe (WORLD BANK, 2002). Relation between Regionalism and Globalisation Globalisation and regionalisation are two key features of the contemporary world politics and are not completely new processes. Regional economic blocks have formed due to the impact of globalisation on the economic independence of states. With the decline in the economic sovereignty and the borders becoming porous, the states have been more inclined to work other states in the same region. The regional economic blocs help the states to resist from intensified global competition. These blocks function as customs unions to resist pressure from the wider global economy. With the increasing interdependent global economy, states have established free trade area to facilitate access to larger markets (HURRELL, 2007). Regionalism is inevitably linked with globalisation as globalisation is the increased interdependence of states and regionalism allows this dependence. For example, the European Union makes the foundation of free trade for the states and regionalism allows these trade blocks to increased communication, contact and trade or an opportunity for globalisation. There are three possibilities of mutual relationship between the two, considering the economic dimension. We further discuss them in details: Regionalisation as a Component of Globalisation: Regionalism, today, is a potent force in the process of globalisation. If globalisation is considered as a compression of the temporal and spatial aspects of social relations then regionalism may be considered as an aspect of globalisation. With this aspect of helping national economies to grow more competitive in the global market, the regional interaction shall result in multilateral cooperation on a world basis, adaptation of liberal premises about cooperation and opening up of local economies. Thus, regional integration can be summed as a part of international economic order and when impelled by the raw material forces becomes a component of globalisation. As globalisation unfolds in an uneven pattern it may be expressed through regionalism (DIETER, 2007). Regionalisation as a Challenge or Response to Globalisation: As regionalism results in the creation of trade blocks and integration framework, thus, opposing the neoliberal harmony of interest view of the global economy which looks towards favouring the national loyalties and frameworks. Conversely, the move towards the formation of regions might be motivated by the refusal of a policy of one universal culture and the promotion of an alternative political or social organisation other than the states at the regional level. Regionalisation and Globalisation as Parallel Processes: Any reference to the global economy highlights both the trends of regionalisation, where the international economy is divided into mega regions of North America, Europe and East Asia, and globalisation. It is very difficult to assess the existence of security communities and complexes without an overall dimension of global security and so a better possibility is that both globalisation and regionalisation go parallel in both the areas pf economics and security. Benefits of Regionalism A number of benefits of regionalism have been highlighted through various studies and theories and the market size is the best attribute to deliver the benefits of development. Economic expansion has resulted due to the initiative of regionalism which has explored the growth effects of business integration. Regionalism along with globalisation has resulted in economic growth and trade creation. These trade opportunities have resulted in attracting FDI which has proved very potential in the economic growth of a country (SIDERI, 2000). Apart from the economic importance of regionalism, it has some non-economic benefits also. It has somewhat emphasised the path of poverty reduction, creation of collective identity and emergence of collective bargaining capacity. Another benefit that is closely linked to the economic benefit of increased market size is interest aggregation and has been seen as an important element of global governance. Regionalism has also helped in regional coordination and planning. Regionalism and the End of Cold War During the time of Cold War, bipolarity and nuclear weapons had created contextual effects leading to the emergence of a semi-global system. With the end of the Cold War the effects of the global system on the regional security dynamic and national decisions has decreased. The world is in state of ideological cease-fire but still looking for paradigms to shape up the international order. The process of globalisation has looked towards breaking the boundaries and interdependence of the people and regionalism has helped in integration of the world through new thoughts and actions serving both as an objective and form and is a decisive step in the process of globalisation. There are few role of regionalism towards globalisation which is further discussed. Regional integration has covered a huge range of economic and political agreement between nations which may be formal or informal and bilateral or multilateral leading the states towards globalisation. It has resulted in increased political cooperation and also the bargaining of both the group and its members. It has helped in dealing with inequalities in different regions and is an additional asset to globalisation as the integration does not offer similar benefits to the developing or industrialised countries. It helps in grouping of geographically close countries towards globalisation. Regional integration has served as a factor of industrialisation and international trade development which has directly affected the impact of economies of the region and intra-regional trade. It has helped such form through reduction of tariffs, expanding demand and the effect of common external tariff. Regional integration has better organised and allowed better management to the corporate of the community helping it to compete better in the international environment. The formation of EU and NAFTA have, under their own constitutive documents, implemented free trade zone for the member countries for better trade. This has helped the European companies with a bigger platform and promotion of their presence in the international markets thus, benefiting their comparative advantage in global trade (TELO, 2007). Borders have become factors of cooperation and no longer serve as a division or opposition between states. Regional integration, just like globalisation has looked towards abolition of borders which can be best found in the Schengen zone of the European Union which has institutionalised free movement of people. While globalisation is the free movement of financial flows similarly regional integration attracts investment supporting capital accumulation. Regionalism has backed flexible agreements and increased the economic interdependence in regions through formal agreements. Globalisation has numerous risks related to financial sphere and acceleration of capital movement. Regional integration is the best way to encounter the disruption due to globalisation. Conclusion Regionalism has been adapted by many countries across the world in the direction of globalisation towards regional integration helping in improving the economies of the region and having a strong impact on the development of the region. This paper has explored the benefits of regionalism to cope up with globalisation for the underdeveloped countries and regions and also considered the specific benefits which are perceived to be gained by the developing countries due to some form of regional integration. The paper has very well highlighted how the formation of EU and NAFTA has helped regions in development through their own constitutive documents. References DIETER, H. (2007). The Evolution of Regionalism in Asia. Economic and Security Issues. London: Routledge. HURRELL, A (2007). “One World? Many Worlds? The place of regions in the study of international society”;International Affairs; Vol. 83, No. 1; pp. 127-146 SIDERI, S (2000) ‘Globalisation and Regional Integration’, in Shiela Page, ed., Regions and Development: Politics, Security and Economics. London: Frank Cass. TELO, M (2007). European Union and New Regionalism; Ashgate; p. 5 WORLD BANK (2002). Globalization, Growth, and Poverty. World Bank Policy Research Report. Read More