The Economic Structures of Different World Regions

Trade Network Analyses Economic Structures of the EC/EU, ASEAN, MERCOSUR, and SADC

Simon Fink and Daniel Rempe

Most European integration theories rely at least implicitly on intraregional economic interdependence, and especially trade interdependence, in order to establish causal claims about processes of regional integration. Despite the long-standing debate between neofunctionalism (Pierson 1996; Sandholtz 1998; Haas 1958) and intergovernmentalism (Moravcsik 1998), they agree that intraregional trade interdependence creates demands for regional integration (Mattli 1999). In neofunctionalism, trade interdependence creates spillovers to related fields of product regulation. For example, trade in foodstuffs generates the functional need to standardise regulations, harmonise safety measures, and introduce common standards of quality assessment and product labelling (e.g. Krapohl 2008). In intergovernmentalism, trade interdependence influences the preferences of domestic interest groups. Economic interest groups that

S. Fink (H)

University of Bamberg, Bamberg, Germany e-mail: This email address is being protected from spam bots, you need Javascript enabled to view it

D. Rempe

FocusEconomics, Barcelona, Spain

© The Author(s) 2017 91

S. Krapohl (ed.), Regional Integration in the Global South,

International Political Economy Series,

DOI 10.1007/978-3-319-38895-3_4

rely on exports for their revenue strongly support further integration and pressure their governments to act accordingly (Moravcsik 1998).

However, one should be cautious about the veracity of stylised facts about intraregional economic interdependence that stem from research on well-developed regions in general and the EU in particular. Most prominently, it is not clear whether these stylised facts also hold true for developing regions. The usual assumption is that regional interdependence is high in well-developed regions, but low in developing regions. In order to measure different degrees of intraregional economic interdependence, scholars of comparative regionalism often rely on more or less valid indicators like the share of intraregional trade in comparison to all international trade of the regions’ member states. But such indicators of regional interdependence are overly simplified, and different indicators produce different assessments of regional interdependence (De Lombaerde et al. 2010). Consequently, one needs more finely tuned measures when analysing the intraregional interdependence patterns of regional organisations outside of Europe.

To remedy this methodological gap, this chapter uses network analysis to study regional trade patterns. The methodological claim is that the study of regional integration can benefit from the application of network analysis. Network analysis methods have recently been introduced into international relations, because their epistemological underpinnings provide an excellent match for many theories of international political economy (Hafner-Burton et al. 2009; Maoz 2009). Network analysis allows one to elucidate the magnitude and scope of interdependence, and to communicate the results in a convenient way without hiding the complexity of the underlying interdependence relations (Brandes et al. 1999).

Using network analysis, this chapter contributes to an analysis of the causal mechanisms laid out in Chap. 3. Most importantly, network analysis sheds light on the question whether intra- or extra-regional economic relations are more important for the members of a regional integration project as a whole. This question forms the starting point for both causal mechanisms, as dependence on extra-regional markets creates an interest constellation oriented towards external partners. Additionally, network analysis may contribute to an analysis of the probable distribution of interests among member states of regional integration projects. Network structures can hint at regional economic imbalances, which in turn may contribute to the emergence of Rambo situations in which one member sees its interests primarily served by closer ties to external partners and neglects regional integration.

The main result is that the starting point for both causal mechanisms can be empirically established. The interdependence patterns of the European Community (EC) show a high regional interdependence and comparatively little dependence on external partners. Thus, the EC had a viable internal market from the beginning and was not dependent on external partners. Moreover, the likelihood of a Rambo situation was low, as Germany and France—and later the UK—had nearly equal positions at the centre of the network so that there was no single dominating regional power. The picture for the Association of Southeast Asian Nations (ASEAN), the Common Market of South America (MERCOSUR), and the Southern African Development Community (SADC) is completely different. These regions exhibit a large dependence on trade with external partners. While there is no straightforward relation between economic interdependence patterns and likely integration outcomes, one can tentatively infer the interests of regional actors from the network analyses. Accordingly, regional integration in ASEAN, MERCOSUR, and SADC is most likely not due to intraregional market-making dynamics, but must be oriented towards external partners.

Moreover, the analyses show which actors dominate each region in economic terms and may consequently enjoy extra-regional economic privileges; this in turn increases the likelihood of Rambo behaviour. The extremely asymmetric trade pattern in SADC suggests that the dominant member state, South Africa, has little to gain from trade within SADC, but rather is very much focused on European export markets instead. To a lesser extent, a similar problem might be induced from the asymmetry between the dominant member state, Brazil, and its smaller neighbours in MERCOSUR. The least likely case for Rambo situations seems to be ASEAN, where Indonesia, Malaysia, Singapore, and Thailand balance each other, and where the gains from external trade are distributed relatively equally among these member states. {{

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