Transcript The Law of Unintended Consequences? Greek Civil

Sotiris Petropoulos
University of the Peloponnese
Regional
Integration
Schemes in the
Mediterranean
Contents

Measuring Economic Development

Regional integration

Agadir Agreement

Maghreb Union

EU
Is economic growth
even?
Why do we care about
economic growth?
Economic
Growth is
connected to well being
Correlation between GDP
per capita and life
expectancy and literacy
Why do we care about
economic growth?
GDP, Life Expectancy, and Literacy
Purchasing Power Parity
 If
exchange rates are used to compare
the size if these countries to developed
countries will make them seem smaller
than the really are.
 Should use PPP to compare size of
economies across countries

Calculated by taking a basket of goods
and finding how much it costs in different
countries
Human Development Index
Initiated
in 1990 and undertaken by
UNDP in its annual series of HDRs.
HDI is based on 3 goals:
 Longevity
 Knowledge
 Standard
HDI=
of living
1/3(Income index)+1/3(Life
expectancy index)+1/3(education
index)
Human Development Index

Ranks 175 countries into 3 groups
 Low human development = 0.00-0.099
 Medium human development = 0.5-0.799
 High human development = 0.80-1.00
Country
HDI
GDP rank-HDI
rank
Low HD:
Tanzania
0.436
+21
Medium HD:
Turkey
0.735
-21
High HD:
Canada
0.936
+3
International Trade
 Continuous
increase of trade volumes
 Gradual
decrease of tariff levels
(rounds of trade negotiations)
 Creation
 Increase
of WTO
in the number and size of
Regional Trade Agreements (RTAs)
Billions $
Source: WTO, 2013
Global Trade
20000
18000
16000
14000
12000
10000
8000
6000
4000
2000
0
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: WTO, 2013
50%
1,700
1,600
45%
1,500
1,400
40%
1,200
1,100
30%
1,000
900
25%
800
700
20%
600
15%
500
400
10%
300
200
5%
100
1997
1995
1993
1987
Post-Tokyo
Round
1991
1989
1987
1985
1983
1981
1979
1972
Post-Kennedy
Round
1977
1975
1973
1971
1969
1962
Pre-Kennedy
Round
1967
1965
1963
1961
1959
1957
1955
1953
1947
GATT's
establishement
1951
1949
0
1947
0%
1945
Average tariff level
35%
1994
Post-Uruguay
Round
Trade volume indices
1,300
Source: WTO, 2013
Definitions

Regional Integration: the integration of
independent economic areas in larger
economic entities (R. Gilpin)

International Area: Limited number of states
geographically connected with a certain
level of mutual interdependence (Joseph
Nye)

Main characteristics:
√ geographical proximity
√ Increased level of exchanges
Theoretical Approaches

International Trade Theories: attempts to gain from
free trade

Neo-institutionalism: created to deal with market
imperfections and enhance economic
cooperation
Basic motive: welfare

New Political Economy: emphasis on interest
groups and in distributive consequences of
regional integration.

Marxism: attempt by capitalists to increase the
level of capital accumulation.
Systemic Theories
 Realism
and Neo-realism

State interests

No-discrimination between politics and
markets

Basic motive: power

Hegemonic Theory (Kenneth Waltz)

Responses to globalization
Regional Level and
Interdependence
 Functionalism


(Mitrany)
Political integration follows economic
cooperation
Global leaders opt at creating international
institutions
 Neo-functionalism


(Haas)
Self-empowered processes towards
integration
Spill-over effect
Internal Politics
 State
power
 Democratization
 Consolidation
of domestic interests
Eclectic Approach

No general theory is enough

Political motive are present

Main drivers:

Lack of international leadership

Emerging powers / intensification of
international competition / technological
advances

Economic security dilemmas

Increased importance of economies of scale
Levels of integration
Characteristics
No tariff barriers vis-à-vis
members
Common external tariff
Free movement of
production factors
Harmonization of
monetary and fiscal
politics
Transnational decisions
beyond economic
issues
FTA
Customs
Union
Common Economic
Market
Integration
√
(NAFTA)
√
√
(EEC)
√
√
√
√
√
√
√
(EU)
√
√
(EU)
√
√
Trade consequences
 Creation
of trade
 ….among
 ….trade
diversion
 …towards
 Issue
member-states
third parties
of rules of origin
Importance
 1ο
«wave»
 2ο «wave»
After WW II (EEC)
Early 1990s
Creation of new / further integration
of existing ones
Significant increase of importance
Importance
 Most
advanced example – the EU
 Global
Phenomenon (ASEAN,
NAFTA, SADC, MERCOSUR, SAARC
etc)
 Key:
USA
EU
NAFTA
ASEAN + 3
ASEAN
SADC
MERCOSUR
EU
NAFTA
FTAA
MERCOSUR
ASEM
Agadir Agreement








Egypt, Jordan, Morocco and Tunisia
Initially signed on 8 May 2001
Finally signed on 25 February, 2004
Entered into force: 6th of July 2006
Implementation: 27th of March 2007
Creates: 120 million market, combined GDP of € 200
billion.
Aim: Creation of an FTA
The initial agreement gives emphasis to:


Arab brotherhood
Charter of the Arab League, recognizing the importance
of supporting joint Arab economic co-operation
Agadir Agreement
A
Free Trade Area gradually during a transitional
period to be completed at the latest by 1 January
2005
 Directly links the Association Agreements between
Med. Countries and EU
 Zero tariffs on most industrial & agricultural
products
 No deal in services
 Issues of non-tariff trade barriers
 Clause of “substantial damage” to local industries
 Open to “Any Arab state member of the Arab
League and the Greater Arab Free Trade area,
linked to the EU through an Association Agreement
or a free trade agreement”
Wippel 2005
Wippel 2005
Wippel 2005
Agadir
Agreement
website
Agadir
Agreement
website
Agadir
Agreement
website
Agadir
Agreement
website
Agadir Agreement
 Why?
 Benefits?
Maghreb Union
 Algeria,
Libya, Mauritania, Morocco and Tunisia
 1st Maghreb Summit (1988)
 Treaty of Maghreb Union (17 February 1989)
 88 million people, +500 billion combined GDP
 Aims:



The consolidation of fraternal relations
The progressive realization of the free movement of
persons, services, goods and capital
The adoption of a common policy in all areas
Maghreb Union
 1991
- adopt unified tariffs on imports
 1995 - full customs union
 It
is a step away from political tensions and
towards economic gains
 1st
Maghreb Summit (1988)
 Treaty of Maghreb Union (17 February 1989)
 88 million people, +500 billion combined GDP
 Aims:



The consolidation of fraternal relations
The progressive realization of the free movement of
persons, services, goods and capital
The adoption of a common policy in all areas
Maghreb Union
 Why?
 Benefits?