Economic and Political Issues for Governments and Firms
Edited by Sidney Weintraub, Alan M. Rugman and Gavin Boyd
Sidney Weintraub and Gavin Boyd A free trade area of the Americas that is not slimmed down in substance will have a great potential to complement the role of the European Union as a large advanced regional system in the international political economy. The USA and the European Union (EU) dominate the world trading system, and the prominence of this Atlantic relationship, based on large scale structural interdependencies, will be increased as countries in the Southern Hemisphere become more closely linked, economically and politically, with the USA. Industrializing countries in East Asia, South Asia, the Middle East and Africa have been unable to form viable systems of regional economic cooperation. Of the major transnational economies, Russia is still recovering from acute recent macromanagement failures, and China, developing a system of national socialism with the support of substantial foreign direct investment, is forming economic ties with nearby states, but shows ambivalence about cultivating closer relationships, and this is reciprocated. As a free trade area, the Western Hemispheric system will be an elementary form of regional economic integration in which rising levels of structural interdependence will tend to motivate consultations for the harmonization of policies conducive to further market integration, subject to the effects of cultural and political differences that will restrain initiatives for collective management. The elementary level of integration will entail a weaker capacity than that of the EU for coordinated involvement in the world economy, and the contrast will become sharper if the EU continues advances toward the formation...
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