The BRICS (Brazil, Russia, India, China, South Africa) are a fine example of explaining the new dimension of economic regionalism where BRICS’ intra-regional trade relations become the binding factor towards its economic integration and independence. The existing literature is focused on the economic integration of the five emerging countries, for example the economic integration theory (EIT) assumes that increasing globalization and technological progress leads to freer trade and movement of economic factors as well as to deeper integration over time. It shows that physical border is no longer a criterion for economic interdependence and integration within a group while the concerns and common interests form important factors for a new dimension of economic regionalism.
The concept of economic regionalism is defined as an empirically observable process of increasing cross-border activities, cooperation and coordination within a group of countries through integration. Originally, the concept of economic regionalism has been based on economic cooperation between natural partners (neighbouring countries or countries on the same continent). But since technological progress reduced transaction costs, intercontinental and global economic integration has become important in recent decades. Geographical distance may stay important for trade flows, but intercontinental relations of emerging countries record a steady rise in trade relations. In general, regionalism could be defined as preferential cooperation among nations that are relocated in terms of geographical proximity, with certain common characteristics such as historical, cultural, political and so forth. The objective of cooperation might be economic, political, or cultural in nature. In this context, the economic regionalism is considered more autonomous, outward-oriented, comprehensive and multi-dimensional process which includes trade and economic integration, environment and social policy issues relating to security and democracy, where the nation-states and other actors play an important role.
Table of Contents
PROLOGUE
THEORIES ON ECONOMIC REGIONALISM
Regional Integration theory
Customs Union Theory
BRICS AND OPEN REGIONALISM
EPILOGUE
Research Objectives and Themes
The primary objective of this paper is to examine the evolving concept of "open" economic regionalism within the context of the BRICS nations, analyzing how these countries move beyond traditional geographical integration models to foster multilateral economic interdependence. The study investigates how BRICS utilizes non-traditional mechanisms to reshape global trade dynamics and institutional cooperation.
- Theoretical foundations of functionalism, neo-functionalism, and Customs Union theory in the context of modern regionalism.
- The shift from physical border-based integration to multidimensional, cross-regional cooperation.
- The role of the New Development Bank (NDB) and Contingent Reserve Arrangements in facilitating institutional integration.
- BRICS' strategy of "trade creates geography" and its impact on bypassing traditional trade-distorting tariff mechanisms.
- The tension between regionalism and the multilateral trading system under the WTO regime.
Excerpt from the Book
Customs Union Theory
Jacob Viner was the eminent economist adherent of economic regionalism and regional trade arrangements (intra-regional trade) during the post-war period. He posited that regional trade arrangements can lead to trade creation, if regional trade arrangement members switch from inefficient domestic producers and import more from other members of the regional trade agreement. On the other hand, trade diversion takes place if members switch imports from low-cost production in the rest of the world and import more from higher-cost producers in the partner countries. Trade diversion lowers welfare not only the partner countries but also the rest of the world too. Viner’s analysis shows that trade creation and trade diversion have opposite welfare implications and the net effect will happen on which of these two effects dominate (Viner, 1937).
Viner took a broad view of a regional customs union, and his analysis is relevant to most regional preferential trade arrangements. “One of the numbers of arrangements for reducing tariff barriers between political units while maintaining barriers against imports, from outside the regions” while a ‘perfect customs union’ defined as an arrangement, which meets the following condition. Customs union is more likely to operate in the regional free trade direction, whether the assessment is in terms of its consequences for customs union area alone or for the world as a whole.
Summary of Chapters
PROLOGUE: This section defines economic regionalism as an evolving process of cross-border cooperation and explains the shift from traditional neighboring partnerships to global, intercontinental integration driven by technological progress.
THEORIES ON ECONOMIC REGIONALISM: This chapter provides a theoretical analysis of Regional Integration theory (including functionalism and neo-functionalism) and Customs Union theory, evaluating their relevance to the modern BRICS framework.
BRICS AND OPEN REGIONALISM: This chapter analyzes how BRICS implements a new dimension of open regionalism through institutions like the New Development Bank and diverse cooperation axes, emphasizing economic and political integration that transcends simple physical borders.
EPILOGUE: This section suggests that BRICS must expand its cooperation beyond trade into finance and people-to-people contacts, proposing a redefinition of regionalism based on the premise that "trade creates geography."
Keywords
economic regionalism, economic integration, economic interdependence, gross domestic product, regional integration, foreign direct investment, geographical proximity, multilateral system, BRICS, New Development Bank, customs union, trade creation, trade diversion, functionalism, globalization.
Frequently Asked Questions
What is the primary focus of this paper?
The paper explores the concept of "open" economic regionalism specifically within the BRICS group, examining how these emerging economies promote interdependence and integration in the post-Cold War era.
What are the core thematic fields of the study?
The core themes include regional integration theories, the shift from traditional trade blocs to cross-regional cooperation, the role of institutional frameworks like the NDB, and the influence of BRICS on the global multilateral system.
What is the central research question?
The research seeks to understand how BRICS is redefining economic regionalism through a "trade creates geography" approach and how this departs from traditional, discriminatory trade bloc models.
Which scientific methods or theories are applied?
The paper utilizes political and economic theory, specifically drawing upon Functionalism, Neo-functionalism, and Jacob Viner’s Customs Union theory, to analyze the institutional behavior of the BRICS nations.
What content is covered in the main body?
The main body covers the theoretical underpinnings of regionalism, the transition of BRICS toward an "open" regionalist model, and the role of FDI and currency arrangements in modern state cooperation.
What key terms characterize this work?
The work is characterized by terms such as economic regionalism, multilateral system, foreign direct investment, and trade creation.
How does the New Development Bank (NDB) facilitate integration?
The NDB serves as an institutional building block that provides legitimacy and funding for infrastructure projects, thereby facilitating bilateral trade arrangements among member states and non-members alike.
How does the author interpret the concept of "trade creates geography"?
It implies that economic cooperation and trade flows between nations are becoming more important than geographical location, allowing for the formation of regional groups that are not limited by shared borders.
- Quote paper
- Monica Simangele Maphumulo (Author), 2019, New Dimensions of Economic Regionalism. BRICS' Integration and Independence through Globalization, Munich, GRIN Verlag, https://www.grin.com/document/502144
