Question

Discuss regionalization of world trade

Answer 1

Regionalism means a phenomenon in international trade where States create groups for the purpose of trade and to collectively reduce barriers of trade among the members of a group. Most of this phenomenon appears in the form of regional trade agreements these groups like all trade legends vary greatly in terms of the scope of the goods that are covered the institutional bylaws and guidelines of this agreement etc. There is not a universal definition for regionalism due to disputes over the importance of geographic proximity and on the relationship between economic flows and policy choices to stop however a region is often defined as a group of countries located in the same geographically specified area. An example which illustrate this is the African ,Caribbean and Pacific group of states which in growth African and Latin America and Caribbean. The incident of regionalism has increased in recent history as the number of members in the GATT and WTO increased. this has generally been attributed to problems with the world Trade organisation. Small Nations that are not part of the quad countries may engage in RTAs to enhance their power with the WTO. RTAs may also serve as an alternative among countries with similar trade policy goals when they cannot have their goals implemented through WTO negotiations. There are two camps within the international political economy that series regionalism as either and aid or an obstacle to global integration. Some decry the loss of multilateralism and the resulting division of the world into the regional trade alliances. others believe that regionalism encourages States to reduce trade barriers in an initially less painful manner, and thus helps state transition to a position where they are better suited to reduce trade barriers multilaterally. opinion as to the effects of the ever growing number of regional integration projects continue to differ in their supporters see them as a meaningful complement to the attempts to achieve multilateral liberalization and as a pragmatic in between stage on the way towards the global removal of all barriers to trade the latter can only be achieved in the long run via strenuous international negotiations. Regional integration ,they claim that presents a stimulant to the multilateral process. The critics on the other hand see formal integration as a turning away from the principle of multilateral liberalisation with negative consequences for global welfare. Reasonal preferences in trade, services and capital transactions necessarily imply discrimination against third parties. Their present an institutionalized beggar my neighbour policy strengthen the tendency towards regional concentration and lead in the final analysis to the disintegration of the world economy into protectionist economic blocs.

Increasing regionalism cannot be ignored that there is a certain concentration of economic activities on a few regions know that regionalization in increasing. Wstern Europe is presently the domain raising the 32% of global economic production followed by North America with 30% and Asian specific region with 23%. Regionalization is even more marked in world trade. Western Europe share of the trade in goods is 48% and its share of trade in services over 50% . The rise of Japan and resulting opening of this first and second generation of newly industrialized countries to Hamburg institute of economic research HWWA,Hamburg, Germany. The concentration on these 3 large regions has increased continuously since the end of the second world war. The driving forces behind this development are Europe and dynamic countries of the asia-pacific region. The economic growth of the latter will probably continue in the coming years to be considerably higher than that of established industrial countries of Western Europe and North America ,which will lead to a further shift in the region and structure of the world trade. The importance of developing countries in Latin America, Africa and western and southern Asia for trade will probably continue to decline. The trend of recent decades will this continue,in which these countries share of the world market fell from 24 to 15 percentage. Regionalization of world trade is increasing as a result of the growing intensity of trade interdependency within the trade. Trade within the individual major regions and the exchange of goods between them account today for three-quarters of world Trade. The intraegional trade in goods in western Europe, North America and Asia Pacific alone makes about 50% of total world trade. Western Europe now conduct 70% of its trade within its own borders. Despite its already high level intra European trade in goods expanded for further in the eighthies. In the asia-pacific region too, intra-regional trade is growing and already covers almost half of other regions total foreign trade. The trade relationship between Japan and the four Asian NICs in particular strengthen regio-nationalisation. Only in North America has regionalization shown no increase in so far. Interregional trade between the USA and Canada has stuck around 30% of the foreign trade for a number of decades.