Working Paper: CEPR ID: DP7852
Authors: Richard Baldwin
Abstract: Feedback mechanisms are the key to sequencing when it comes to regional integration. Feedback mechanisms can mean that today?s policy or institution alters the political economy landscape in a way that makes it politically optimal for future governments to take further steps towards integration ? even when these steps are not politically optimal from today?s perspective. After outlining the theory, the paper uses feedback mechanisms to organise Europe?s postwar integration narrative, and then draws lessons for today?s integration of East Asia. The paper suggests that the spontaneous cooperation that created Factory Asia has not been codified. One starting point for Asian regional institutions would be to institutionalise the spontaneous cooperation that already exists on trade, services, and investment. New, creative thinking is needed on the sort of soft-law commitments and new modes of cooperation that would make this work with limited sovereignty pooling.
Keywords: sequencing; regionalism; bequest; capital accumulation; east asian integration; inheritance; lessons of european integration; regionalism and wealth
JEL Codes: D20; F02; F13; F15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| initial tariff cuts (F13) | subsequent policy decisions (D78) |
| trade liberalization (F13) | further liberalization (L59) |
| integration decisions of one country (F55) | political pressure for others (D72) |
| initial policy decisions (D78) | broader integration outcomes (F02) |
| feedback mechanisms (D91) | sequencing regional integration (F15) |