Assessment and Measurement of Regional Integration

Philippe De Lombaerde

• Publisher: Routledge
• Year: 2006
• ISBN:
  9781134212972
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

A unique examination of why the quest for global free trade often forgets that trade liberalization is organized regionally rather than multilaterally. There are now more than 250 regional integration initiatives and this number is steadily increasing. This trend raises a key question: What is the impact of regional integration, both for the countries involved and for those excluded from regional integration schemes? Using a combined economic, political science and scientific approach, this book explores how regional integration can be measured and evaluated and delivers comprehensive answers. It looks at the methodological problems involved in designing monitoring tools for regional integration in a systematic way and makes a number of concrete suggestions for designing and organising systems of indicators of regional integration. It also offers a critical overview of available indicators and tools and presents crucial new monitoring instruments.

This book will be of great interest to students and researchers of international relations and economics as well as policy makers and professionals within international and regional organizations.

Part I
General theoretical and methodological aspects

1 Indicators of regional integration: conceptual and methodological aspects

Philippe De Lombaerde and Luk Van Langenhove¹

INTRODUCTION

Regional integration (RI) refers to processes of complex social transformations characterised by the intensification of relations between independent sovereign states. It creates new forms of organisation, co-existing with traditional forms of state-led governance at the national level. The processes of regional integration that emerged after the Second World War, were originally mostly about trade and economics, but it has become clear that, especially since the 1980s, with the so-called ‘new regionalism’ wave, regional integration can be seen as a multidimensional process that implies, next to economic cooperation, also dimensions of politics, diplomacy, security, culture, etc.²

Trade and economic integration remain a central aspect of ongoing integration schemes. And in today’s globalising world, there seems to be a growing tension between the quest for global free trade (as managed through the WTO) and the fact that trade liberalisation is more often regionally than multilaterally organised. Indeed, the number of regional integration initiatives is steadily increasing. About 250 RTAs are currently in force (Gavin and Van Langenhove, 2003). This trend raises the question of what the impact of regional integration is, both for the countries involved and for those excluded from a given regional integration scheme. Also, given the fact that the ‘new regionalism’ is said to have at least the potential to protect countries from possible negative aspects of globalisation (Van Langenhove, 2003), one can wonder how such claims can be assessed.

However, these issues are linked to broader questions about the future of the international institutional and governance architecture, and whether tendencies may be expected in the direction of multilateralism, (multi-)regionalism or a (new) combination of both (Fratianni and Pattison, 2001; Hettne, 2005).

Looking for answers to these questions implies that one needs to have tools to monitor regional integration and assess its impacts. This could be realised through a system of indicators of regional integration (SIRI). There is evidence of a growing interest of policy-makers for such a system. The explicit objective to monitor RI processes in ACP countries in the framework of the Cotonou Agreement (European Commission 2002a, 2002b) and the proposal by the

European Central Bank (ECB) to measure institutional and economic integration (Dorrucci et al., 2002), illustrate this point. The Inter-American Development Bank is also considering as one of its priority actions within its Strategy on Regional Integration, ‘gathering, evaluation and dissemination of compatible data to measure progress in the regional integration effort’ (IADB, 2002), whereas ALADI planned the preparation of yearly reports on the evolution of integration in Latin America. Proposals for worldwide systems of indicators on other specific aspects of governance, like the database under construction for the Fiscal Decentralisation Indicators of the World Bank, also suggest the feasibility of such a system.³ And finally, the African economic integration indicators project at UNECA needs to be mentioned.⁴

Notwithstanding the above-mentioned interesting efforts, a SIRI able to monitor RI worldwide and based upon sound methodological premises does not exist yet. Hence, this Chapter explores organisational, conceptual and methodological issues that arise in the process of constructing a SIRI. Also, a proposal regarding the dimensions and variables to be included in a SIRI will be advanced.

USERS AND PRODUCERS OF A SIRI

A first issue to tackle is ‘who’ should and could be involved in constructing and operating a SIRI as well as ‘for whom’ a SIRI has to be developed.

Ideally, the construction of a SIRI should not be seen exclusively as an academic project, but also as an exercise in building up a relevant policy instrument. The recent announcement by the European Commission (EC) of its intention to monitor the progress of regional integration schemes which involve ACP countries and to condition future resource allocation in terms of demonstrated progress in these processes, is a clear illustration of the scope and importance of such a system and the possibilities of combining an academic interest with political relevance. The announcement of the EC is a logical consequence of the inclusion of regional integration as a goal and means of development and development cooperation in the framework of the Cotonou Agreement.⁵

So, regional organisations are likely candidates for being involved in the construction of a SIRI. Not only because, as in the case of the EC, they want to monitor RI elsewhere but also because regional organisations want to engage in monitoring their own policies. One can also imagine that individual countries could be interested in a SIRI as a tool to monitor the impact of their involvement in regional trade agreements or other regional cooperation schemes on their domestic performances. There are also academic interests in developing a SIRI. For instance, to address the question to what extent regional integration initiatives can help in reducing the possible negative consequences of globalisation. Or: to what extent have regional integration initiatives positive effects on raising the quality of life in a developing region?

The above implies that many different actors can, for different reasons, be interested in a SIRI.

For cost-efficiency reasons, but also for political reasons, it would be useful to pool resources for the construction of a SIRI. Three types of institutions would be natural candidates for participating in such a project: multilateral institutions (UN, WB, WTO), regional institutions and the academic sector. In addition, certain interest groups that are operating internationally (NGOs, foundations) could also be interested in participating. Designing and implementing a SIRI will only be successful if conceived as a joint product between ‘users’ and ‘producers’, taking into account input from all relevant stakeholders.

GENERAL CRITERIA FOR THE IMPLEMENTATION OF A SIRI

Independently from the choice of overall objectives, dimensions and contents of the system, a whole range of problems are likely to occur at the moment of implementation. These problems range from the difficulty of measuring a specific variable and the quality of a particular data source to the problems related to managing and funding the system.

Other problems relate to the availability, generation and frequency of the data needed to feed the system, and the management of a workable and sustainable system of indicators. Sustainability is likely to involve some degree of co-responsibility from the side of the data-generating institutions. The quality of the data is needed to guarantee comparability.

A crucial issue will obviously be the translation of the chosen variables into indicators. Although each variable brings with it its specificities, some general criteria should be identified for selecting appropriate indicators. Especially when systems are multidimensional (multidisciplinary) it is useful to have some generally applicable criteria. Anderson (1991) has offered an example of an attempt to identify such criteria (see Table 1.1), but it should be noted that, although thought-provoking, these criteria were developed in the context of the national economy.

If a SIRI is used for comparative research, as would be in the case of an indicator system for monitoring different regional integration processes in the world, a choice is possible between traditional (‘comparative’) indicators (permitting a direct comparison between regions on their score on a particular variable) and ‘relative’ (‘reflexive’) indicators (comparing first the performance of each region with its own objectives). The World Bank (2002), for example, favours relative comparisons. A concrete example of a case where both types of indicators are combined is the system of Indices of Economic Integration Effort in Africa (UNECA, 2001: 2). In that system two yardsticks are used:

1. the self-defined pre-determined targets for target-driven indicators (if they exist for particular integration groupings), or
2. an average of the n best performers.

Table 1.1 Anderson’s criteria for choosing ‘good’ economic indicators

Furthermore, designing an indicator system can be either conceived as an ordered presentation of the values of the selected relevant variables, permitting – for each variable – cross-country or cross-region comparisons and time series analysis, but without establishing explicit weights for the variables and their categories. Or, one can design the system so that it is based on the calculation of aggregate indicators per country, per region and/or per sector. This is when one is confronted with the so-called ‘index problem’. The weighting and aggregation procedures that are designed ‘pre-process’ the data so that the reading by the users is simplified, not necessarily its interpretation. The weighting procedure can be based on statistical criteria (based on the statistical contribution of the variables in the explanation of a goal variable), expert opinion or practical considerations (data availability, lack of knowledge or valid criteria, etc.). In any case, weighting procedures will always be arbitrary to some extent. The World Bank (2002), for example, pointed to the problem of combining indicators applying to different topics or different regional arrangements, and suggests accompanying the quantitative data with qualitative assessments. Although it is attractive to combine both types of indicators, it would be helpful to have more clarity on the specific potential contribution of both and on the borderline between quantitative measurements and qualitative assessments. It should also be borne in mind that qualitative assessments are more difficult to implement (although not necessarily to interpret) in international and intercultural contexts than quantitative ones.⁶

Another choice that has to be made is whether the system should confine itself to descriptive measurements of observable variables or whether a combination is needed of such measurements with analytical information and estimations. The second option makes a SIRI richer for analysis but one is then confronted with the problems of non-standardised methods of analysis, difficulties with the data collection and the complexity involved in the interpretation of the information contained in the system.

CONCEPTS OF INTEGRATION

A core issue in the development of a SIRI is the underlying definition of (regional) integration that will be used and how it will be operationalised into dimensions and variables.

The concept of integration refers to a process in which units move from a condition of total or partial isolation towards a complete or partial unification. Applied to the interaction between independent sovereign states, integration refers to a process of large-scale territorial differentiation characterised by the progressive lowering of internal boundaries and the possible rising of new external boundaries. Such complex social transformation may or may not imply some kind of permanent institutional structure. Although integration at the level of states can refer to many different aspects of cooperation, it is mostly used in a context of economics and international trade. Integration then becomes economic integration and can be defined as ‘the voluntary linking in the economic domain of two or more formerly independent states to the extent that authority over key areas of domestic regulation and policy is shifted to the supranational level’ (Mattli, 1999: 41). The assessment of ‘levels of integration’ has led to the use of typologies, like in the case of Balassa’s stages approach. Although these typologies are attractive and allow the classification of countries and regions, it should be clear that in empirical research the first problem is to position the countries or regions in a continuous multidimensional ‘space’ which can then (ex post) be ‘compartmentalised’, more or less successfully.

Obviously, no unique definition of integration is available in the literature, so that here too important choices need to be made. The designers of a SIRI (from the academic world or from policy institutions), will have to make these choices as a necessary precondition for the construction of the system. The definition of integration will almost necessarily imply that other related concepts will have to be defined also. These include, for example, cooperation and coordination.⁷

It should be stressed that the delimitation of the concept of integration and the scope of the information system is not an exclusively academic exercise. Ultimately, the builders and users of the system will have to make the key decisions on the basis also of political and practical considerations. Therefore the discussion below is limited only to giving some orientations for the definition of the concept and will not present a particular and exclusive definition yet.

Often, regional integration is presented as a location in a spectrum of forms of interaction between states. In Dobson’s spectrum, for example (Figure 1.1), integration is presented as the most intense form of inter-state interaction, involving common policies among states (Dobson, 1991). This way of presenting the phenomenon of integration has the advantage of showing how it is positioned vis-à- vis other forms of interaction, but does not necessarily clarify when cooperation becomes integration.⁸ In this framework, integration is opposed to conflict, and independence occupies a central place. However, one might argue that both conflict and integration imply interaction, so that interaction (voluntary or non-voluntary merger, in its extreme appearance) should rather be opposed to independence; conflict and integration being ...

Table of contents

• COVER PAGE
• TITLE PAGE
• COPYRIGHT PAGE
• FIGURES
• TABLES
• CONTRIBUTORS
• ACKNOWLEDGEMENTS
• INTRODUCTION AND SUMMARY
• PART I GENERAL THEORETICAL AND METHODOLOGICAL ASPECTS
• PART II ASSESSMENT OF ECONOMIC INTEGRATION
• PART III ASSESSING POLITICAL INTEGRATION, REGIONAL GOVERNANCE AND PEACE