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Regional Integration: Implications for Agriculture in South- Eastern Europe Garry Christensen
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The Nature of European Regional Integration SHALLOW INTEGRATION – Trade Liberalization Versus DEEP INTEGRATION – Common Markets – National Policy Harmonization – Mobility of Capital and Labour
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Trade Liberalization and Shallow Integration Bilateral and Regional Free Trade Agreements Customs Unions Trade Creation Trade Diversion Terms of Trade Effects
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Mechanisms for Deep Integration Promote Capital Flows and Foreign Direct Investment Promote Free Movement of Labor Institutions to Manage Integration Improve Communication and Transport Infrastructure Establish Monetary Union
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Mechanisms for Deep Integration – continued The Harmonization of National Policies for – Domestic taxes and Subsidies – Fiscal, monetary and exchange rate policies – Product and Factor Market Regulation (anti-trust laws, commercial law, product standards)
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Integration of Developed and Developing Countries Trade Liberalization – Non-reciprocal versus Reciprocal Trade Preferences – Timing and Sequencing of Reform Three Tier Structure of Countries – EU-15 (full EU import protection & budget support) – Accession – 8 (full import protection, partial budget support) – SEECs – (no EU import protection, no budget support)
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Trade Liberalization + Deep Integration = Economic Growth Transfer of capital, technology and information to increase productivity Increase in Foreign Direct Investment Remove rent-seeking activities and imperfect competition Efficiency Gains Imports of modern equipments, machinery
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Implications and Lessons for Agriculture Agriculture Trade Liberalization is difficult and slow (paths to integration…) Policy reform and convergence facilitates deep integration (sequencing…..) Deep Integration is a realistic objective with substantial benefits Potential benefits of regional integration are huge, but not all will benefit.
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Implications and Lessons for Agriculture (continued) Great potential for FDI to deepen and accelerate integration (actual FDI is low…) Supermarket growth as a powerful vehicle for faster and deeper integration
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