Advantages and negative effects of international integration processes. Mercosur example

Advantages and negative effects of international integration processes. MERCOSUR example.

Integration is a very important process nowadays. There are many different integration groups of states at this time. They have a great influence on the present political and economic situation in the modern world. Generally speaking, the consequences of the processes are positive but there are some negative tendencies caused by them.

It is really important to distinguish economy from a process of political integration despite of their tight interdependence. International economic integration is regarded as a consciously directed process of cooperation, convergence of national economies, which provides the movement of goods, services, capital and labor force between countries. The main aim of this process is to increase trade between the countries through negotiation. The essential part of economic integration is the division of labour, which results in the increase in general effectiveness. One of the neoliberal scientists, a hungarian economist B.Balassa marks out five stages of economic integration:

1. 
   Free Trade Area
   
2. 
   Customs Union
   
3. 
   Common Market
   
4. 
   Economic Union (its highest form is monetary fiscal union)
   
5. 
   Total economic and political integration¹.
   

Balassa emphasizes the intensive government participation in economy so, according to him, the last stage of integration is not only an economic union but also political one because of supranational common markets, with their free movement of economic factors across national borders. In summary, political integration is a process, as a result of which united political community is established in different states (political units)².

In the modern world the European Union is known as the most developed economic union. It is placed at the forth stage of integration, according to Balassa, and has the common currency. However similar processes progress everywhere. One of the promising regions is Latin America. Many researches in this sphere note that it has a rapid growth of economy according to statistics. The World Bank Vice President for Latin America and the Caribbean Hasan Tuluy in the interview with the Spanish newspaper “El País” spoke about results achieved by this region. He noticed that about 60 million of population cease living on the breadline and the gap between the rich and poor had been reduced. Also he said that this region had overcome the world financial crisis effectively³. His words can be proved by such indices as GDP, import, export, unemployment rate and others. For example, Brazil´s GDP permanently has been rising⁴. The export and import in this country increase even (/uniform, proportional?), so the trade balance is mostly positive. The rate of unemployment decreases by degrees. So, according to the indices, the economy of Brazil grows.

Argentina has the similar statistics. According to “Trading Economics” The Gross Domestic Product in Argentina was near 368.71 billion US dollars in 2010⁵.

The situation is worse in Uruguay and Paraguay, but they show growth of economies too. Such rapid economic advance in Latin America’s countries is supported by integration unions. The most dynamically developed union is MERCOSUR (Common Market of the South), that was created in March 1991 under the Treaty of Asuncion. This group unites 4 countries: Brazil, Argentina, Uruguay and Paraguay. Venezuela is awaiting ratification. Also there are several associated members who can join free-trade agreements but remain outside the bloc's customs union: Bolivia, Chile, Colombia, Ecuador and Peru⁶. Now MERCOSUR is placed at the second stage of integration which is customs union. The main aims of this unification are:

• 
  The market widening provided integration
  
• 
  The elaboration of common trade policy
  
• 
  The acceleration of economic development⁷
  

It helps the states of alliance to stabilize their economic situation. The countries’ principal achievements related to the social sphere, for example, are the decrease in the number of people who live on the breadline; the development of education and a health system development; the stimulation of private enterprise.

Undoubtedly, the mutual assistance among MERCOSUR members is an important positive feature. The relations between Brazil and Argentina show good a example of this effect. In 1991-1993 Brazil had low pace of economic development and only the market of Argentina could help Brazil’s industry to overcome. In 2 years the situation changed and Argentina needed help of Brazil because of the economic recession. In 2008 both countries suffered the world financial crisis. However, their tight cooperation within MERCOSUR helped them to deal with the crisis successfully. Argentina’s leaders declared in this context that in the frames of partnership they strove to provide a way out of the crisis for all the members of union⁸. If we regard their economic indexes we can understand that they resolve financial problems successfully. Also widening the integration proves economically advantageous for Uruguay and Paraguay, which are less developed than the other countries in the union. If they face difficulties they can expect that Argentina or Brazil will help them. However, we should take into account that there is a danger of economic dependence on the leading countries of the common market. This organization has implemented a lowering economic differentiation program in MERCOSUR countries since 2004. For example, Paraguay obtained a loan from the common funds to solve such state social problems as poverty (42% of the population live on the breadline), unemployment and agriculture (only 2% of population own 80% of rural farmland ⁹.

It is important to note the main tendencies towards the development of this organization at present:

• 
  Deliverance from such defects of an institutional structure as persistent growth of hardly controllable intergovernmental bodies, lack of supranational bodies responsible for the realization of common decisions¹⁰.
  
• 
  Cooperation widening in financial and social spheres.
  
• 
  Growth of authority in world politics
  

Also the mutual support between countries is observed in foreign policy questions. For example, a conflict arose between Argentina and Great Britain over the Falkland Islands where oil fields were found. The disputed Falkland Islands, known as the Malvinas in Argentina, lie off the coast of South American country in the Atlantic. The islands have been under British rule since 1833. Argentina invaded the Falklands in 1982, which sparked a war in which more than 600 Argentinean and 255 British military personnel died. Britain retained the control of the islands after the war. Argentina resumed its claims to the British-controlled islands and its position was supported by its MERCOSUR partners. Members try to defend the sovereignty of the Falkland Islands. At an organization summit the members announced that they would not allow the Falkland Island’s ships in their ports¹¹.

Thus political and economic integration has a number of advantages. They can be divided into 2 parts: domestic and external. The first group of advantages contains such aspects as mutual assistance at the time of economic recession, consolidation of efforts in struggle against world crises. The second set of positive aspects includes: export increase, political and economic support, growth of influence in foreign affairs.

1^ Щербанин Ю.А. Мировая экономика: учебник, М.: Юнити, 2004.

2^ Цыганков П.А. Политическая социология международных отношений, М.: Радикс, 1994.

3^ José Manuel Calvo, Entrevista: Hasan Tuluy Vicepresidente del Banco Mundial "Latinoamérica está mejor preparada para la crisis": http://www.elpais.com/articulo/economia/global/Latinoamerica/mejor/preparada/crisis/elpepueconeg/20111211elpnegeco_5/Tes

4^ Brazil GDP, http://www.tradingeconomics.com/brazil/gdp

5^ Argentina GDP, http://www.tradingeconomics.com/argentina/gdp

6^ Overview of Mercosur (Common Market of the South), http://news.bbc.co.uk/2/hi/americas/5195834.stm

7^ Acerca del MERCOSUR: http://www.mercosur.int/t_generic.jsp?contentid=655&site=1&channel=secretaria&seccion=2

8^ Яковлев П.П. Аргентина и страны БРИК: модели двусторонних отношений, Россия в БРИКС: http://www.mid.ru/brics.nsf/WEBforumBric/B749769645525EFDC3257859005A82AB

9^ Костюнина Г.М.; Пронина Н.К.: Эволюция концепции формирования общерегиональной концепции свободной торговли в Латинской Америке, Российский внешнеэкономический вестник №7 (июль) 2008

10^ Лавут А. А. Меркосур: современный этап развития, особенности функционирования и торговой политики в отношении третьих стран, Российский внешнеэкономический вестник №6 (июнь) 2010

11^ UK concerned as Mercosur decides to block Falkland Islands ships: http://edition.cnn.com/2011/12/21/world/americas/mercosur-falklands/index.html?iref=allsearch