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Economics and Differential Patterns of Political Integration: Projections About Unity in Latin America

Published online by Cambridge University Press:  22 May 2009

Ernst B. Haas  and
Philippe C. Schmitter
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Extract

Does the economic integration of a group of nations automatically trigger political unity? Must economic unions be perceived as “successful” in order to lead to political unification? Or are the two processes quite distinct, requiring deliberate political steps because purely economic arrangements are generally inadequate for ushering in political unity?

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Articles
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International Organization , Volume 18 , Issue 4 , Fall 1964 , pp. 705 - 737
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Copyright © The IO Foundation 1964

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References

1 The case of Austria-Hungary prior to 1850 is one of the few exceptions. The initiation of the customs union after that date gave rise to the complaint by Hungarians that the more industrialized Austria was “exploiting” them by monopolizing the more profitable opportunities for investment, i.e., thus obtaining unequal benefits from the union. See Jaszi, Oscar, The Dissolution of the Habsburg Monarchy (Chicago: University of Chicago Press, 1929), pp. 185–212Google Scholar. This argument has become a standard one in the contemporary setting. The Swedish-Norwegian political union, on the odier hand, never developed into an economic union at all. See Lindgren, Raymond E., Norway-Sweden (Princeton, N.J.: Princeton University Press, 1959), pp. 37–44CrossRefGoogle Scholar.

2 It is true that the Zollverein was gradually “politicized” as it came to encompass more member states and additional and more complex economic tasks. It is also true that not even its Prussian initiators had “planned” this deliberately in order to unite Germany and expel Austria from the Confederation, even though they added this purpose to their earlier economic objectives after 1850. But the success of the Zollverein as an economic precursor to political union was due essentially to the special position that Prussia occupied within it, the enormity of the Prussian market as compared with the other members, and the fine administrative and political sensitivity with which the Prussian managers of the Zollverein wooed and satisfied their partners, sometimes at the expense of short-run Prussian losses. Further, a short war was still required to drive home the lesson of interdependence. See Henderson, W. O., The Zollverein (2nd ed., Chicago: Quadrangle Books, 1959)Google Scholar; Price, Arnold H., The Evolution of the Zollverein (Ann Arbor: University of Michigan Press, 1949)Google Scholar; Bechtel, Heinrich, Wirtschaftsgetchichte Detttschlands (Munich: Callwey, 1956), Vol. 3Google Scholar.

3 These conceptions of function, purpose, and problem solving in relation to international integration are explored in detail in Haas, Ernst B., Beyond the Nation-State: Functionalism and International Organization (Stanford, Calif.: Stanford University Press, 1964)Google Scholar, Chapters 3 and 4. For their application to the western European setting, see Haas, , “International Integration,” International Organization, Summer 1961 (Vol. 15, No. 3), pp. 366–392CrossRefGoogle Scholar.

4 For applications of “pure economic” projections to the future of LAFTA, see Flammang, Robert A., The Common Market Movement in Latin America (unpublished PhD. dissertation, State University of Iowa, 1962)Google Scholar; Farag, Attiat A., Economic Integration (unpublished Ph.D. dissertation, University of Michigan, 1963)Google Scholar. But compare with Balassa, Bela, The Theory of Economic Integration (Homewood, Ill.: Richard D. Irwin, 1961)Google Scholar. Balassa is concerned with LAFTA as well as with western Europe, and he predicts a number of steps involving politization if LAFTA is to realize its economic objectives. See also Mikesell, R. F., “La Teoria dei mercati comuni e gli accordi regionali tia paesi en corso di sviluppo,” Mondo Aperto, 08 1962 (16th Year, No. 4), pp. 213–236Google Scholar.

5 We are deliberately excluding the physical environment as a separate pattern variable because it seems to us that the differences in natural resource endowment, topography, climate, and the like do not enter as autonomous determinants of the integration process. They do enter insofar as they affect the aims and policies of men; but then they would show up in our pattern variables with respect to elite complementarity. Size, moreover, is considered a separate variable.

6 Lindberg, Leon N., The Political Dynamics of European Economic Integration (Stanford, Calif.: Stanford University Press, 1963)Google Scholar; Haas, Ernst B., The Uniting of Europe (Stanford, Calif.: Stanford University Press, 1958)Google Scholar; Diebold, William Jr, The Schuman Plan (New York: Frederick A. Praeger, 1959)Google Scholar; Bcever, R. Colin, European Unity and the Trade Union Movements (Leyden: A. W. Sythoff, 1960)Google Scholar; Meynaud, Jean, L'Action Syndicate et la Communauté Economique Européenne (Lausanne: Université de Lausanne, Ecole des H.E.C., Centre de recherches européennes, 1962)Google Scholar.

7 The best comprehensive study of the Central American Common Market we have discovered is by Pincus, Joseph, El Mcrcado Comtin Centroamericano (Guatemala City: Oficina Regional para Asuntos de Centroamérica y Panamá, 1963)Google Scholar.

8 For interesting data on this point, see Nye, Joseph S. Jr, “East African Economic Integration,” Journal of Modern African Studies, 12 1963 (Vol. 1, No. 4)CrossRefGoogle Scholar; and Rosberg, Carl G. Jr and Segal, Aaron, “An East African Federation,” International Conciliation, 05 1963 (No. 543)Google Scholar.

9 Springer, Hugh W., Reflections on the Failure of the First West Indian Federation (Cambridge, Mass.: Harvard University, Center for International Affairs, 1962)Google Scholar; Berg, Elliot J., “The Economic Basis of Political Choice in French West Africa,” American Political Science Review, 06 1960 (Vol. 54, No. 2)CrossRefGoogle Scholar; Schachter, Ruth, “Single Party Systems in West Africa,” American Political Science Review, 06 1961 (Vol. 55, No. 2)CrossRefGoogle Scholar.

10 For a suggestive attempt to derive a typology of Latin American countries from a wealth of comparative statistics, see “Tipología Socioeconómica de los Países Latinoamericanos,” Revista Interamericana de Cicncias Sociales, 1963 (Vol. 2, Special Number)Google Scholar. The authors group Colombia, Ecuador, and Peru together, in spite of Colombia's substantially higher per capita income. Paraguay is placed with Bolivia, although for our purposes we have “advanced” it to inclusion in the Andean group. Brazil and Mexico are found to “cluster” along a number of dimensions, as do Argentina, Chile, and Uruguay. See also Germani, Gino and Silvert, Kalman, “Politics, Social Structure and Military Intervention in Latin America,” European Journal of Sociology, 1961 (Vol. 2, No. 1)CrossRefGoogle Scholar.

11 For a summary of the rates and composition of pre-LAFTA regional trade, see Salas, O. Campo, “Comercio Interlatinoamericano e Integratión Regional,” Ciencias Políticas y Sociales, 01 1960 (6th Year, No. 19), pp. 39–57Google Scholar.

12 The succession of drafts, proposals, and memoranda covering this period is collected in UN Document E/CN.12/531. The period is also discussed, albeit with quite different emphases, in Urquidi, Victor L., free Trade and Economic Integration in Latin America (Berkeley, Calif.: University of California Press, 1962)Google Scholar and Mikesell, Raymond F., “The Movement toward Regional Trading Groups in Latin America,” in Hirschman, Albert O. (ed.), Latin American Issues (New York: Twentieth Century Fund, 1961)Google Scholar. See also the comprehensive review in Dell, Sidney, Trade Blocs and Common Markets (New York: Alfred A. Knopf, 1963)Google Scholar. Dell forcefully supports the argument that trade blocs are uniquely justifiable in the case of underdeveloped countries.

13 For the text of the Treaty, see Urquidi, op. cit.

14 For information concerning major developments in LAFTA, see the section, “Informe Mensual de la ALALC” in the excellent monthly organ of Mexico's Banco de Comercio Exterior, Comercio Exterior. The most important articles concerning regional integration which have appeared in this journal over the last five years have recently been reprinted. See La Integracidn Economica Lalinoamericana (Mexico City: Banco de Comercio Exterior, 1963)Google Scholar.

15 Pierce, Eduardo de Sevilla y, “Flujo y Composición del Comercio de la ALALC, 1960–1962,” Comercio Exterior, 06 1963, pp. 515–518Google Scholar.

16 See La Integración Económica Latinoamericana, passim; Comercio Exterior, Supplement of September 1963, pp. 711–713; and October 1963, pp. 736–748; and February 1964, pp. 84–85, 87–88. See especially the Brazilian-Chilean proposal of April 1963 in Comercio Exterior, May 1963, pp. 314–315, 316–317.

17 For a more elaborate statement of the stylistic importance of supranationality in western Europe, see Haas, Ernst B., “Technocracy, Pluralism and the New Europe,” in Graubard, Stephen (ed.), A New Europe? (Boston: Houghton-Mifflin, 1964)Google Scholar.

18 For this view of change and transitional attributes, we are indebted to Eisenstadt's, S. N. essay in LaPalombara, Joseph (ed.), Bureaucracy and Political Development (Princeton, N.J.: Princeton University Press, 1963), especially pp. 96–97Google Scholar. For a similar view, see Hirschman, Albert O., Journeys Toward Progress (New York: Twentieth Century Fund, 1963), pp. 230–231Google Scholar.

19 Eisenstadt, , op. cit., pp. 112–113Google Scholar.

20 See especially the evidence that in Mexico there is an emerging conception of national purpose generated by a purely national experience in carrying out a social and economic revolution. This purpose then gives rise to a national mission to help less modern Latin American nations, to show them the true way, through the medium of institutions and organizations free from United States influence. Among others, see Castañeda, Jorge, Mexico and the United Nations (New York: Manhattan Publishing Company, 1958)Google Scholar; Paz, Octavio, The Labyrinth of Solitude (New York: Grove Press, 1961)Google Scholar; Cancino, F. Cuevas, “The Foreign Policy of Mexico,” José Julio Santa Pinter, “The Foreign Policy of Argentina,” and Nelson de Sousa Sampaio, “The Foreign Policy of Brazil,” in Black, J. E. and Thompson, K. W. (ed.), Foreign Policies in a World of Change (New York: Harper & Row, 1963)Google Scholar. The interplay between modernizing ideology and foreign policy is treated by Silvert, K. H. for Argentina and by Frank Bonilla for Brazil in Silvert, K. H. (ed.), Expectant Peoples: Nationalism and Development (New York: Random House, 1963)Google Scholar, Chapters 7 and 10.

21 We equate the views of Dr. Prebisch with those of the ECLA Secretariat as a whole; cf. Baer, Wener, “The Economics of Prebisch and ECLA,” Economic Development and Cultural Change, 01 1962 (Vol. 10, No. 2), p. 169CrossRefGoogle Scholar. For an early statement of the center-periphery theme and the argument for national industrialization, see Prebisch, Raúl, “The Economic Development of Latin America and its Principal Problems,” Economic Bulletin for Latin America (UN publication), 02 1962 (Vol. 7, No. 7), pp. 1–22Google Scholar (originally published in 1950). For a later statement stressing regional integration as the principal means for reducing peripheral dependency, see Prebisch, Towards a Dynamic Development Policy for Latin America (UN Document E/CN.12/680/Rev.1).

22 Venezuela, Banco de, Boletín de Economía y Finanzas, 09 1960Google Scholar, as quoted in Dell, , op. cit., p. 274Google Scholar.

23 Dell, , op. cit., pp. 224–225Google Scholar.

24 Our use of the notions of “balanced” and “unbalanced” growth parallels that of some economists without being identical to it, though it should be noted that economists apparently do not agree among themselves on the meaning of the concepts. See Streeten, Paul, Economic Integration (Leyden: A. W. Sythoff, 1964), pp. 106–112Google Scholar, where balanced growth is seen as a series of coordinated and simultaneous investment decisions so designed as to minimize waste and loss in resources. Economists advocating “unbalanced” growth do so for a variety of reasons, usually hinging on efficiency in resource allocation. One major exception is Albert Hirschman, who advocates unbalanced growth because he considers it the major realistic setting in which bureaucrats and businessmen in underdeveloped countries will learn how to make rational decisions. The results of unbalanced growth will create the kinds of administrative and economic crises in which better decision making will be learned. See his The Strategy of Economic Development (New Haven, Conn.: Yale University Press, 1958)Google Scholar.

Our use is similar to Hirschman's. We envisage “balanced” growth as the situation in which the expectations of the participating elites with respect to their individual benefits from integration are roughly matched, and we argue that if they are successfully matched in a transitional society, the total bulk of innovation will be limited. “Unbalanced” growth occurs when expectations of matched benefits are not in fact realized, when some parties gain more than others, thus creating an institutional crisis which calls for adaptation in terms of new—and more extensive—expectations. On the other hand, it remains quite possible that these adaptive conclusions will not be drawn by actors experiencing unbalanced growth. Their kind of “adaptation” may well lead to a downgrading of the center and, therefore, disintegration.

25 For the role of Mexican técnicos in the evolution of LAFTA and Mexico's membership in it, see our “Mexico and Latin American Economic Integration”, Research Series (Berkeley: University of California, Institute of International Studies, 1964)Google Scholar. The general role of the técnicos has been documented, unfortunately, only in the case of Mexico and Uruguay. See especially Vernon, Raymond, The Dilemma of Mexico's Development (Cambridge, Mass.: Harvard University Press, 1963)Google Scholar; Glade, William P. Jr, and Anderson, Charles W., The Political Economy of Mexico (Madison: University of Wisconsin Press, 1963)Google Scholar; Taylor, Philip B., “Interest and Institutional Dysfunction in Uruguay,” American Political Science Review, 03 1963 (Vol. 57, No. 1), pp. 62–74CrossRefGoogle Scholar.

26 Our treatment here rests on the suggestive argument of Fred Riggs, in LaPalombara, op. cit.

27 See Busey, James L., “Central American Union: The Latest Attempt,” Western Political Quarterly, 03 1961 (Vol. 14, No. 1)CrossRefGoogle Scholar; Hess, Raul, “La Integración Económica Centroamericana: Espectro o Esperanza?” Combate, 06 1961Google Scholar. Political and economic aspects of the movement are discussed by Hernández, E. A., , S.J., The Organization of Central American States in Historical Perspective (unpublished Ph.D. dissertation, Harvard University, 1963)Google Scholar.

28 For interesting material on the continuation of premodern attitudes among Latin American businessmen, see Lauterbach, Albert, “Objetivos de la Administracion de Empresas, y Requerimentos del Desarrollo en la America Latina,” Revista de Economia Latinoamericana, 01 1963 (3rd Year, No. 9), pp. 119–174Google Scholar.

29 In Hirschman's terms, ECLA managed to insert a series of “neglected problems” into a general concern for the “privileged problem” (industrialization) in the formula for a regional market. For the distinction between the two kinds of problems and possibilities for manipulating them, see Hirschman, , Journeys Toward Progress, pp. 231–235Google Scholar. The likelihood that some of the “neglected problems”—payments, planning, customs procedure, tax harmonization—would have to be faced by LAFTA in order to make development succeed was foreseen by Balassa, (op. cit., pp. 204–205, 215–230, 260–263)Google Scholar.