Global integration vs regional integration European Economy Topic 1

World map considering GDP/capita

World map considering population density

World map of transport lanes

World map considering the distribution of McDonald's restaurants

Global integration – Globalization Definitions : » ” A historical process, developed as a result of human progress and innovation that refers to the continuous integration of world wide economies throughout trade and financial flows”. (FMI, 2000). » ” Globalization refers above all to a dynamic and multidimensional process of economic integration whereby national resources become more and more internationally mobile while national economies become increasingly interdependent”. (OECD, 2005). » ”The intensification of crossnational cultural, economic, political, social and technological interactions that lead to the establishment of transnational structures”. Martens and Zywietz (2004, 2006). » ”Creating networks of connections among actors at multi- continental distances, mediated through a variety of flows including people, information and ideas, capital, and good”. (Dreher 2005).

Globalization – Old or new? Important similarities between globalization today and 100 years ago include: Important differences between globalization today and 100 years ago include: – Free trade. – Free capital markets. – Migration of labor. - Dominant world power. – Behavior of the dominant world power. – Currency. – Foreign direct investment – Institutions

Global integration Emerging markets begin to play an active role in this movement since the early 1980s by initiating a gradual process of market liberalization activities In recent years emerging markets have accounted for about 50% of the world's economic growth Better risks diversification Technological progress More efficient allocation of capital Accelerating economic growth Benefits An increase in financial vulnerability due to external shocks Disparities in commercial exchanges Costs

Global integration Indicators that directly influence the global integration process: TRADE TO GDP RATIO. Indicators that indirectly influence the global integration process: the analysis of custom duties changes, establishing some credibility indicators.

Global integration indicators Country/IndicatorEuropean UnionRomania Degree of openess of the economy ( ) 29.8%73.8 % Exported goods (mil.USD) Imported goods (mil.USD) % in total exported goods15.06 %0. 41% % in total imported goods16.54 %0. 15% % in total exported goods / main destinations SUA 18% China 8.4 % Switzerland 7.9% Russia 6,4% Japan 22.4% Coreea 13.9% India 7.7% European Union 6.1% % in total exported goods /categories of goods Agricultural products 7.2% Fuels and mining products 8.2% Manufactured goods 81.1% Agricultural products 0.1 % Fuels and mining products 84.9 % Manufactured goods 5.4%

Global integration- regional integration interconnection Regional integration – definition – the process that enables the development of interstate groups considering regional basis. Causes of regional integration: the increase of the degree of openness of the economies. Effects: Increased competiveness on external markets due to the mobilization of common efforts.

Global integration - regional integration interconnection Global integration Regional Integration (Asia). Regional integration Global Integration (Latin America).

Regional integration Forms: » Economic cooperation » Free trade area (NAFTA, AELS, CEFTA, MERCOSUR, ASEAN) » Custom union » Common market (CAER). » Single market » Economic and Monetary Union » Total economic integration

Regional integration Integration FormMembers Free trade area AELSIceland, Liechtenstein, Norway and Switzerland. NAFTAU.S.A, Canada and Mexico CEFTACroatia, Macedonia, Bosnia and Herzegovina, Moldova, Serbia, Montenegro, Albania, Kosovo MERCOSURArgentina, Brazil, Uruguay, Paraguay, Venezuela. ASEANBrunei, Cambodia, Indonesia, Vietnam, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand. Common market CAER Romania was a member

Benefits of regional globalisation Social and economic policies coordination. Harmonization of external connections. Creating some supra-national institutions that would facilitate the governing process.