6.1. The Concept of Regional Integration
6.1.2 Approaches to Regionalism
134
region starts to be perceived as made up of powerful institutions. In furthering a military pluralist argument, Haas emphasised the addition of society elites (Haas, 1958: XIV). Haas (1958:5) however noted that the functionalist approach to regional integration was premised on the study of the process of regional integration in Europe. For the SADC, as will be discussed in the next section, integration was driven by security and political issues. The drive for economic development came later. There has however been limited participation of non-governmental or non-state actors and civil society.
135
special circumstances in order to address particular problems and countries would, in some cases, avail their resources, territory, and expertise to another or others. For Southern Africa, or specifically the SADC, issues that have remained of common interest are economic development and eradication of poverty. Whatever issue is identified as of common interest to countries in a regional arrangement can receive support in regional cooperation. In the early days of the SADC, as countries in the SADC were struggling for independence, the common position or interest of wanting to remove colonial rule was defined and expressed clearly, even at the OAU level. This shaped the nature of early regionalism greatly, even in SADC as will be seen later.
6.1.2.2 Market Integration
The market integration approach is one of the commonly discussed approaches to regionalism and is more focused on trade and economic relations. This follows a linear progression to integration as was followed by the European Union. In the linear progression, a group goes through different degrees or levels of integration. Usually the first level of integration would be a free trade area (FTA). In the free trade area, countries in a regional arrangement remove trade tariffs from among themselves, but each member country retains its own set of trade tariffs applicable to non-member countries. The next level would be the customs union in which the free trade area is maintained but member states apply or impose the same tariffs on non- members. The tariff regimen by regional members on non-members is also known as a common external tariff (CET). The next level of market integration after the customs union is the common market. In the common market the customs union is maintained, but in addition there would be free movement of factors of production. This includes labour and capital. The common market is followed by an economic union where the common market is maintained and with it is the harmonisation of fiscal and monetary policies. When there is unification of the monetary and fiscal policies, then the last stage of total economic integration is achieved (Balossa, 1961:1).
The gains that arise from integration are measured against the concept of trade creation and trade diversion. Trade creation arises from a situation when there is trade shift within the region from a high cost producer to a more efficient lower cost producer. Trade diversion comes about when trade is shifted from an efficient low-cost non-member producer state to a less efficient high-cost producer who is a member of the regional grouping (Lee, 2002:3). Market integration is expected
136
to increase a region’s overall production levels as the region becomes more efficient and member countries specialise in areas where they have a comparative advantage. With an increase in the market size and increase in the levels of production, the region is expected to benefit from economies of scale. It is envisaged that the trade between the group and the world will be done on improved terms which benefits the region more. Market integration brings about competition and producers are forced to identify more efficient methods of production. Technology is expected to improve and also the quality of the products (Robson, 1980:3).
For the stated benefits to be realised in market integration, the theory assumes that the transport markets operate under conditions of perfect competition. It also assumes there is free movement of labour and capital within countries, but not outside. The theory assumes that tariffs will be the only trade restrictions and that there will be balanced trade between countries. This has been the biggest challenge for the SADC, given the economic hegemony of South African. In addition, the theory assumes that the prices of goods and services are reflective of the opportunity costs of production and that resources such as labour are fully employed (Haarlov, 1997:26). The SADC pursued the market integration model and it failed because of the conditions and assumptions made by the market integration theory. Unfortunately, some of the assumptions made under the market integration theory are not true for SADC (Lee, 2002:4). An example is the high unemployment levels in SADC and yet the theory of market integration assumes full labour employment. The theory assumes balance of trade which is not true for SADC as South Africa dominates regional trade.
6.1.2.3 Development Integration
Another form of regionalism is development integration. The theory of development integration was developed as a response to problems which were brought about by market integration. In this theory the purpose of integration would be economic and social development. This relates the theory of development integration to theories in development studies (Lee, 2002:4). The additional dimension added of social development in the theory provides for the attention that should be given to the wellbeing of people in relation to regionalism. This resonates well with utilitarianism in ethics. Development integration requires the state to be more involved in coming up with intervention measures that improve the welfare of the people. This is unlike market
137
integration in which large liberal market systems are more at play. To an extent the development integration theory pursues a development trajectory that emphasises the happiness of the people.
One issue of concern with market integration is the issue of unequal distribution of benefits from the integration process. This has been noted as one major reason for the failure of market integration. In cases such as unequal distribution of benefits, states should be active in coming up with policies that are compensatory and offering corrective remedies. The theoretical framework of development integration therefore provides an integration framework in which the market is in a way regulated, or whose effects are corrected to ensure social development. Even though development integration comes up with alternatives or corrective measures to the challenges caused by market integration, it has proved to be difficult to implement compared to market integration (Lee, 2002:4).
6.1.2.4 Regional Integration
Haarlov (1997:15) defined regional integration as “…a process by which a group of nation states voluntarily and in various degree [allow access] to each other’s markets and establish mechanisms and techniques that minimise conflicts and maximise internal and external economic, political, social and cultural benefits of their interaction”. A regional integration takes into consideration both formal and informal markets. Unlike a market integration which follows a linear progression of integration with formal institutions to oversee the progression, regional integration approach does not of necessity follow a linear progression and does not require formal institutions. The amount and intensity of economic, political and social or cultural interaction existing between member states at a particular time is used to assess the level of integration. Furthermore, not all members of the group are required to take part in these activities simultaneously.