Regionalism in Latin America - Essay Example

Regionalism in Latin America Regionalism has revived and changed dramatically in the 21st century following the decline in theory and practice of the globalization in 1970s. Currently, it seems to have overtaken the emerging potent of globalization, especially in the Latin America. Regionalism is a component of globalization but it may be a cause of threat to the globalization too. The main question surrounding the issue of regionalism is whether it is a mere station towards neoliberal or more of pluralistic word that organizes coexistence for the popular support (Thomas 2008:56). What forms of dialect does the regionalism take? In addition, what is the linkage between the multifaceted processes due to the regionalism? To answer these questions regionalist may bring its true picture of contestation among rivals from all sides of intensity. In my essay, I will analyze regionalism in Latin America from the international economic policy with a specific focus to the Andean community, which is a sub region in the Latin America. From a theoretical standpoint, regionalism explains the integration process in the development of a balanced and harmonious society. Introduction Reconfiguration of the Latin America’s regional governance is one major feature for the global political economy in the last one decade. Regional governance is currently transforming and bringing in different forms of regional policies, identities, and cooperation that transform the cartography of the Latin America. Latin America currently has assumed a different regional form of governance that builds the different rationale, which is not restricted to the US hegemony (Scott 2009:57). Regionalism driven by economic calculations represents a conglomerate project on the issue of commerce and political integration. In this conflicting scenario, the regional integration has redefinition from the regional projects that are substantially divergent in visions. The paper is concerned with the question of how transformation of the new regionalist can shape the thinking of the individuals on the political and social cooperation. Concepts used To help understand the issue of regionalism and the current issue in the Latin America one must consider these terms. A region implies the whole of Latin America whereas sub regions as a section of Latin America like the Andean or South America. Regional integration on the other hand is an agreement based on the intergovernmental or supranational model. It may involve economic, political, and social integration objectives (Lauren 2010:124). Lastly, regional trade preferences are agreements based on trade integration and cooperation on areas that promote democracy. Under this paradigm, the agreements result from conglomerate intentions of economic boost. Structural economic reforms of the Latin America The economy of the Latin America has shifted in its economic policy from its low achieving strategy to serious macroeconomic disequilibria (Lauren, 2010:32). Factors like high inflation, fiscal deficits, current account deficits, and financial sectors in critical trouble formed part of the foreign debt crisis in the early 1980s. After the poor economic management of the Latin America, it undertook structural reforms that placed the country on the path toward superior economic performance. Major structural reforms in the country occurred in the governance, trade, financial markets, and the public resources. The region developed a quantitative indicator for the reform policy and their immediate outcomes. The region realized a large economic progress in liberalizing the international trade. The region has made great reforms in the labor markets. Financial development is also evident in the country especially private sector participation in banking and in the stock markets. The economic gains for the government have been the modest but still there is room for development. The earlier reforms in the country occurred in the early reformers like the Chile, and Mexico. This influenced the reforms in the rest of the region countries. Other major economic reforms that occurred during this time was the; replacement of the qualitative restrictions on imports with tariffs. There were reduction in the level of dispersion of the tariffs and removal of exports on taxes, quotas, and licenses issued to traders. Self-sufficiency policy objective reinstated together with elimination of state trading and domestic price controls. The region also assumed principal policy mechanisms with an objective of protecting the wider economy. The region eliminated all non-tariff barriers for all imports to the region. All these structural reforms work hand a hand in with the economic up rise of the Latin America. Integration Schemes in the Americas Economic trade have gained momentum in the region have gained momentum in the recent years. They entail integration schemes in America that are varied and some have ambitious purposes. Among the strong associations is the Latin America Integration Association created in 1980 to create a common market in Latin America (Lauren, 2010:43). The association has achieved this through tariff preferences and the signing off regional agreements. MERCOSUR is another association formed in 1991 to ratify the national parliament for the original members. This association has created free movement of goods within the region. ANCOM is another association in Bolivia, which promotes harmonic developments in the member countries and ensures equality is maintained in these countries. Lastly, we have the UNSSUR signed in 2004 as a free trade agreement. The association aims at free trade in South America and provides economic complementariness in the region. Other associations in the region are CACM, ACS, CARICOM, and NAFTA. All these association have a basic function of facilitating trade in the region and ensuring integration. Geopolitics in the Latin America Geopolitics is an approach, which focuses on the political military matters and trends, which were prevalent in the Latin America. The geopolitical condition of the Latin America compares to other region of the America. The region has experienced a dramatic difference in the geopolitical trend since late 1990s. The current political system of the Latin America is quite in comparable to the traditional system that composed largely of non-democrats like Mexico and Colombia. The Latin America lacks the access to the continents interior. This event has made the region hold much of its development at a stand still. The region has high geopolitical sources starting with largest share of renewable energy. These sources stem more than 70% of the country’s power. Focusing on urbanization as a branch of geopolitics the Latin America has very highly developed and modern urban centers. Levels of regionalism Regionalism occurs in different levels, which express certain regional complexity, but not for comparative analysis. The first level of regionalism is the geographical and ecological regionalism. It had limitation because of physical barriers. The second level is the regional social system, which implies trans-local relation of the social, political, and the economic nature of human groups. The third region is composed of organized corporation, which cover the cultural, economic and military fields. The forth level is the regional civil society, which works to promote social communication in an established region (Scott 2009:112). The fifth level, which is assumed by the Latin America, is one in which a region acts as the subject with distinct identity, legitimacy and decision making structure. It has crucial areas of dealing with conflicts between different management systems and ensures security balance. The organizational structure of this form of regionalism is complex as it transforms communities to unions. The ultimate outcome of this comprehensive regionalism is a regional state, as in the case with the Latin America. The region now composes voluntary evolution of sovereign political units that transfer certain functions. Foreign Direct Investment in Latin America The FDI, capital for the Latin America, exceeds the value of the finances obtained from other market parameters. The increase in the FDI of the Latin America has not flown in equal magnitude as the various regions of other countries. The major countries that have made the greatest FDI in to the Latin America include the United States, Europe, and Latin America itself. The rate of FDI in the Latin America has substantially grown in the last years due to the government dismantling all the barriers of foreign direct investment. All the states have undergone major liberalization in regulating foreign investment. The growth of the FDI of the Latin America has so many beneficial implications to the region (Lauren, 2010:45). First, it induces a fast productivity growth of skilled and unskilled labor. It includes potential sector and its relative expansion skill in the sector. It causes a perfect competition for an equal competition without relative bargaining. It also affects the supply of skills through training and contribution to general education. Currently, the Latin America is restructuring its economies into a greater international competition. The regional integration has helped the Latin America to make considerable progress through tariff liberalization raising its share to more then 85 per cent of the total trade (Schulz Michael Et al. 2009:312). The liberalization has been a centerpiece of the structural reform process of Latin America. Latin America assumed the unilateral liberalization in late 1980s. The main advantage of these regional trade agreements is that they eliminate trade tariffs for their member countries The Andean regionalism process The second wave of the new regionalism has shown well in a sub-region of Latin America called the Andean. When the new regionalism started in Andean, its focus was to enlarge the market of the region through formation of custom unions and a structured industrial planning. From the sub-regional approach to harmonize and plan for the economic policy, the Andean integration has achieved economic development (Lauren 2010:247). The great economic boost in the Andean came from the establishment of the common market in 2005. This proposal started a macroeconomic policy of harmonization intended to construct the country into a committed democracy. This sought to ensure a regional forum that strengthened and improved democratic system of her and the member countries. Regionalism has also been due to similarity in cultural and ethnic structures. For example, the Andean countries have a common language, which is Spanish, and acts as the official language of these countries. They also have another common feature where the Washington DC is their largest trading center (Lauren, 2010:56). The Andean sub region also has a definite governing body headed by a president. The presidential council has heads of states from the member countries. This legislative body has the mandate to make decisions, which then become the laws of the region. In addition, the Andean countries have also formed a court of justice under the community agreement (Thomas 2008:167). A single European act inspired the new regionalism in the Andean. This regionalism based on an institutional model of development and in the path of opening room for competition fits the developing countries. The new regionalism versus the old The contemporary wave of regionalism has in fact taken initiatives and accepted in most of the countries as the viable. However, it is different from the old regionalism. The latter form of regionalism had spread widely in the post-war period and it lead to the formation of the initiatives like the American free trade association, which later became the Central American common market and the Andean community. The old regionalism was an import-substitution industrialization development policy that dominated the post war period. It has its roots in the start of the 20th century. However, it became dominant in the liberal economic policy (Payne 2006:674). It gained full expression in the great depression a time when the private markets and the international trade collapsed and the world governments raised protective barriers like regionalism. It was during these times when the Latin America undertook a more protective way and fully assumed regionalism. Out of this assimilation, the economy of the Latin America started to grow, initially from smaller economies then to the higher economic heights. However, the regionalism diagnoses did not give the best results and a larger and comprehensive market environment was necessary in order to achieve efficient economy progress scale. In this debate of a need for comprehensive market structure, there emerged a potential strategic tool, which now became the new regionalism. The new regionalism aimed at eliminating the trade and investment barriers at among countries or states at the same region. It also maintained the protectionist of the third party, which is the state government (Lauren 2010:241). The new regionalism eliminated trade barriers and introduced tariff liberalization, which was not the case with in the old regionalism. The main difference between the new regionalism and the old post-war regionalism is the framework of policy reform that promoted openness and competitiveness in the market based economies that were not present in the post-war regionalism. The dramatic change in the intra-regional focus of integration makes the greatest difference between the two different regionalisms. The new regionalism is however, recorded to have solid objectives that attribute to its successful break through. The first objective was to strengthen the economic reforms of the integrated regions. The new regionalism aims at creating a strategic policy tool that will reinforce the structural economic reform process in the competitive and globalization oriented world. Countries currently value operations that stimulate investment and growth in the economy of a region not mere assumption like in the case of globalization. Regionalism is thus, viewed as an additional policy tool that is compliment to national reform process (Schulz Michael Et al. 2009:453). Trade liberalization forms the backbone of the new regionalism growth and it is a feature assumed by most of the countries. The regional trade liberalization has overcome most of the problems that faced the old regionalism. It has helped to lower average levels of protection and improve the competitiveness in the regional members. Currently, the new regionalism has been having regional trade agreements that have deep objectives that are contained in the second-generation free trade areas that are also beyond traditional market access, and encourage modernization. This modernization majorly focuses on the institutions that directly increase demands of goods bought in the regional market. The second objective of new regionalism is economic transformation. Despite the liberalization and the increased participation of countries in the world economy, there are increased vulnerabilities of a narrow export base and insufficient competition due to the issue of globalization. However, the new regionalism guarantees all these limitations in the economic transformation policy. The new regionalism guarantees the market access and provides opportunities for export experience and diversification. It also increases the context of principal trade agreements and serves as an outlet for important market array (Thomas 2008:186). Latin America has comparatively taken advantage in this policy since it is an important producer of textiles, dairy products, and food processing. The new regionalism now aims at creating an underlying objective to build long-term strategic considerations that overcome imperfect or incomplete markets that have serious effects on the developing countries at the world market. The new regionalism in Latin America aims at attracting foreign direct investment in order to improve its export network as well as institutional modernization. The regionalism also aims at attaining much through creating larger liberalized and rule-based market with location advantages. This regional agreement will distinguish member countries and help them compete for and attract the foreign direct investment. The new regionalism in Latin America also aims at facilitating regional cooperation that reciprocates preferential trade agreements (Schulz Michael Et al. 2009:564). To attain this Latin America aims at attracting support from the well-organized and private business communities. It also aims at accommodating nationalist sentiments who have little concessions over national sovereignty. The regional cooperation can independently form integration, as it constitutes a parallel track of formal process that contributes to the emergence process. The developmental regionalism infrastructure is a focal point of functional cooperation of the Latin America. The new regionalism in Latin also aims at trade diversion, which can potentially divert the trade in the preferential arrangements, which cost consumers and non-members. New regionalism in Latin America also aims at eliminating the vulnerability of the regional goods. It also aims at redistributing effects from the loss of tariff revenue that has serious asymmetries between partners of an economic integration agreement (Lauren 2010:263). Investment diversion is the major objective policy of the Latin America. This focus aims at attracting foreign direct investment from more efficient locations. Conclusion Latin America sees regionalism as an immediate substitute for the multilateral system. In the region, only one country can actively prepare and negotiate in the development agenda. Regionalism has made the fundamental issue of the political future of the region to be efficient in executing specific roles that facilitate peace, stability, and protection of the human rights. The regionalism economy largely depends on the response of the process to the needs of economic development of the members (Payne 2006:723). The efficiency of the regional government also shapes the future of the regionalism. Regionalism development, security, and peace have integration from the regional cooperation is guaranteed. The competition from import liberalization leads to local concentration of small firms that face immediate prospect of re boundaries. Sustainable agreements require an effective negotiation and implementation that socially fosters efficient adjustment. 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