Power Preponderance, Institutional Homogeneity, and the Likelihood of Regional Integration. Jean Monnet/Robert Schuman Paper Series Vol. 7 No. 12 July 2007

[Introduction]. What explains the variation of regional integration worldwide? The literature on regional integration is as old as the first attempts to establish the European Union (EU), but the attempt to develop generalized theories with systematic testing is relatively new. As the number of regional projects increases, and with the added complexity of overlapping memberships, we are faced with task of explaining and predicting these new movements of cross border cooperation. The project outlined in this paper attempts to continue the current trend of theory development and empirical analysis. After reviewing the range of theories, a central argument will be developed that will synthesize power transition and institutional theories of regional integration. Specifically, the likelihood of institutionalized regional integration increases under a power preponderance structural condition and high levels of trade which promote homogenization of domestic institutions. Increasing homogenization, in turn, promotes trade and integration. A common definition of regional integration states that it is a shifting of certain national activities toward a new center (Haas 1958). Integration therefore is a form of collective action among countries in order to obtain specific goals. These goals can be as grand as political unification (in the case of the EU) or a free trade area, as found in the North American Free Trade Association (NAFTA). Lindberg refines the definition by proposing that it is an “evolution over time of a collective decision making system among nations. If the collective arena becomes the focus of certain kinds of decision making activity, national actors will in that measure be constrained from independent action” (1970: 46). In economic terms it is “a series of voluntary decisions by previously sovereign states to remove barriers to the mutual exchange of goods, services, capital, or persons” (Smith 1993: 4). Also in the vein of economics, integration can also simply mean the degree of market merger among states. This refers to the amount of goods, services, capital, and labor flows among states. While this captures an essence of what is occurring, it misses the institutional aspect of integration which is central to its definition. The degree of market merger occurs because the states have negotiated an established practice of market flows and their regulation. For the purposes of this paper, the definition of integration will follow closely the definitions purposed by Hass and Lindberg. Regional integration(1) is the establishment of regular collective decision making among states for the intention of establishing and regulating market flows. The degree of integration refers to the degree of collective decision making. At one end is an intergovernmental arrangement in which states make common decisions but are autonomous in regulating those decisions. If a regional authority does exist, it services at the pleasure of the individual states. On the opposite end is the supranational arrangement, in which regional institutions do exist and make decisions alongside intergovernmental arrangements or supersede the member-states’ authority. The rest of the paper examines the literature on regional integration with the aim of reviewing, critiquing, and synthesizing prior theories. The synthesis is the establishment of a general theory of regionalism. The subsequent sections will examine the method to test the key hypotheses using systematic measures of the variables and future direction of this proposed research