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Economic Regionalism Reconsidered

Published online by Cambridge University Press:  18 July 2011

Lincoln Gordon
Lincoln Gordon
Affiliation:
Harvard Graduate School of Business Administration
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Extract

During the decade of the 1950's, considerable popularity was won for the idea that the restructuring of the world economy into regional blocs would mark a great forward step in international economic relations, and might also help resolve certain major international political problems. As the new decade begins, and as a new Administration takes office in Washington, it is timely to reappraise the validity of this idea. To do so is not to suggest that regionalism is the most important aspect of foreign economic policy for the new decade. There come readily to mind at least five other major topics: aid for economic development; stabilization of international markets for primary products; the policy of advanced industrial countries toward imports of low-wage manufactured goods from developing countries; the treatment of trade and aid activities of the Communist bloc; and the reduction of the balance-of-payments deficit of the United States. With respect to broad structural relationships, however, the future of economic regionalism is evidently a matter of special importance.

Type
Research Article
Information
World Politics , Volume 13 , Issue 2 , January 1961 , pp. 231 - 253
Copyright
Copyright © Trustees of Princeton University 1961

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References

1 I use this term to include the general approach to trade and investment reflected in the draft ITO charter, and later partly incorporated in the GATT, as well as the monetary and financial arrangements negotiated at Bretton Woods in 1944. The Commission on Foreign Economic Policy (Randall Commission) made a broad review of the whole field in 1953, resulting essentially in an endorsement of the Bretton Woods system by the new Administration and by a majority of both parties in the Congress.

2 GATT reports usually classify Australia with this group, but its income levels are so much higher than the others and its degree of industrialization is already so substantial that it probably fits better into the first category.

3 The IBRD, IMF, and UN agencies, of course, all have memberships far broader than the group of countries under discussion, but they have provided important opportunities and instrumentalities for co-operation among the advanced industrialized nations. There is a basic fallacy in the widely held view that policy co-operation among a group of countries can be organized only through agencies with membership restricted to that group.

4 As pointed out below, however, the earlier phase of European regionalism, in the form of European-wide trade and payments liberalization, did play a most important part in European recovery from 1950 to 1958.

5 The term “all-European” is used to refer to all of Europe west of the Communist bloc.

6 A similar attitude has occasionally been advocated by left-wing leaders of the British Labour Party, but it may be significant that this advocacy has been associated (not necessarily causally) with a decline in their national following.

7 On this point, see Camps, Miriam, Division in Europe, Policy Memorandum No. 21, Center of International Studies, Princeton University, June 15, 1960.Google Scholar

8 For a vigorous presentation of this viewpoint by a former senior Belgian official, see d'Oppuers, Baron Snoy et, “Towards a European Solution,” Lloyds Bank Review (London), July 1960.Google Scholar

9 This arises from the fact that the easiest way to avoid internal trade diversions caused by differential tariff levels within a free trade area is for the higher-tariff members of the group to lower their rates to the levels of the lower members.

10 For a succinct summary of the Latin American arrangements, see “The Emerging Common Markets in Latin America,” Monthly Review (Federal Reserve Bank of New York), September 1960.

11 Robinson, E. A. G., ed., The Economic Consequences of the Size of Nations, New York, 1960, pp. xvii–xviii.Google Scholar

12 This is especially true of the complex plan for a Latin American common market developed by ECLA, with its three categories of countries, three classes of commodities, and annually renegotiated, reciprocally balanced, tariff preferences.

13 In this connection, the situation would be even more difficult if arrangements for merging the European trading blocs included the type of suggestion published in The Economist on July 2, 1960, calling for “perhaps a new joint policy towards Africa giving both ex-French and ex-British territories free access to the whole European market for their cocoa and coffec.”

14 See, for example, Rockefeller Brothers Fund, Foreign Economic Policy for the Twentieth Century, New York, 1958.Google Scholar