Regional integration is the most effective system of promoting trade globally due to its ability to interlink states, harmonize their internal and external demands, emphasis on specialization, and promoting capitalism. It is the sole factor that makes international communities focus on their intrinsic capacities of growth and development as opposed to regional conflicts. Over 97% of the countries and states globally have/ or are engaging in regional integration (Allen and Gioacchino, 2007). Though analysts have differed over the holistic outcomes that results from economic cooperation of the states, it is however clear that the overall consideration may have greater returns. Notably, the large economies roles in the regional cooperation have been in most of the cases overstretched and threats to overshadow the overall objectivity of the process, a system submerged in minor shenanigans of poor negotiations and over dependence.
This paper explores regional integrations roles in promoting international business. Using Russia, the paper explores integration’s pros and cons to the participating countries and the international community. With Russia being conservative in enforcing the ideals of integration between her and other international communities, the paper analyses such implications in the global market. With Russia having laid down its 2020 development plans which takes less emphasis on the need for integration, the paper examines the future of the country and the international trade. Finally, it derives major recommendation for Russia and global community necessary for enhancing international trade and development.
2. Overview of regional integration and Russia
Notably, regional integrations have variant origins that date back to mid nineteenth century. The initial integrations were mostly based on war and need for security which later sprouted to trade. However, mid 20th century has been mostly remarkable as it saw the revolution of main economic concepts of Unions integrations such as European Coal and Steel Community that later expanded to form the current gigantic European Union (Marios and Spyros, 2007). Since mid twentieth century, most of the countries have repositioned themselves after many years of war to ensure that they are able to assimilate fast growth and development. Though all cooperation currently have economic connotation, they have multi objectivity that gives them a plethora of mandate and demands from their member states. Arguably, it is from the auxiliary propositions that the capacity of trade, international repute, power command, and quality of business they operate is determined. Such cooperation includes APEC, ASEAN, CAFTA, COMESA, ECOWAS, GCC, APEC and EU among others that are aiming at increasing their economic grip of the international market share (Allen and Gioacchino, 2007).
Russia is one of the largest countries in the world and located at the heart of Eastern Europe and North Asia. With over 142 million people and vast power energy resources, the country is a major industrial giant. Since the breakup of the Soviet Union, the country has embarked on such integrations that are considered to be cold with majority of the cooperating countries. Even with a high average economic growth of 7%, the country is highly undercut by historical derivation of socialism that views integration to offer a paucity of solutions for its current demand for growth and development (Marios and Spyros, 2007).
Advantages of regional integrations
l Greater access to market of the individual countries products
Creation of trade between the member states is possibly the main reason for countries to venture into cooperation. According to Clifford and Clifford (2008), regional integration entails harmonic access to market of the goods and services that are produced by the integrating countries. Clifford and Clifford continue to say that Russia being a well renowned industrial power requires similar vast market. Under the market forces however, the ability of the consumers to buy the products remains a major factor in dictating the overall profitability. This makes Russia to have great affinity for European Union membership and Integration with US due to the vast consumer economic power by their consumers. The main reason behind fast growth and development of the EU member states is this market availability.
l Reduced restrictions of goods and services, and higher availability
With economic integration, most of the goods and services are given preferential treatment in terms of reduced or abolished tariffs by the member countries. ASEAN members enjoy similar tariffs of their goods and services. Being a member of the EU, its goods and services are not taxed and are therefore able to get to the market at much reduced prices which consumers can be able to afford. This has been the major factor behind the Russia’s recent economic growth which averaged 7% by the year 2007 (Robert, 2008). Following this reduction in tariffs and boarder barriers, it has become much easier for the Russians and other communities in the participating countries to have access to greater choices of goods and services from outside the country.
l Better negotiating capacity for the country’s goods and services
Over the years, one major role of regional integrations has been negotiation on behalf of the member states to get the best deals for their goods and services from other economic integrations. Russia has benefited from the ASEAN and EU membership for good terms of its products supply and sale to the Arab countries, Caribbean, South America, and even Africa (Robert, 2008). This assists in perpetuating the ability to get the best prices and deals due to the power of numbers. This has also created major cooperation in areas of conflict resolution that acts as a guarantee the correct environment for further trade internationally and between the members.
l Easy flow of resources, capital, information, and technology between the member states
Clifford and Clifford (2008) points out that one of the major advantages that integration brings to international trade is enabling the citizens of the member states to have access for opportunities in the integrating region. Though this happens at a higher level of economic union, participating countries are able to address the problems of unemployment with ease. Most of the Russians are currently based in the European Union member states where they settle and work permanently. To add to that, flow of capital and investment is unrestricted in the member states where outsourcing has vastly boosted technological capacity and improved the overall outsourcing ability.
Disadvantages of regional integration
l Suppression of the smaller economies
Marios and Spyros (2007) argues that though integration has many advantages to the member states globally, analysts have referred to it as a well planned stage for suppressing the younger economies. During the World War I, Russia by then USSR was weakened by defeat from US and its allies. Further more, it was weakened by the breaking of the Soviet in the last decade of the twentieth century. Though it is a major power to reckon with, the country has been at a lower stage of reorganizing itself to fully capture and “colonization” of the market. Therefore, the larger economies like US and EU have been oppressive with great demands and restrictions that the country is supposed to adhere to for it to be allowed in various FTAs access (Robert, 2008). This has recently brought the country into sharp conflict with EU leadership.
l External control of the countries internal affairs
As indicated above Russia has been crying foul of external interference of its internal affairs. Though cases of corruption have drastically increased to mimic the prior USSR administration, it is the leadership of economic unions that strongly reprimands the country. Integrations are currently dictating the demand for standards of goods, modes of production, internal governance, labor relations, and emission standards. According to Clifford and Clifford (2008) it is a total external control with the internal structures being reduced to only monitors of the externally made laws.
l Greater competition for local opportunities and resources
According to Joseph (2003), with the members and resources flow being free to move from one country to another, there is bound to have strong levels of competition to the local citizens in the integrating countries. Due to its large population compared to other integrating countries, Russia has seen itself being at a loosing end due to its citizens being much lower technologically and academically a system that have given the external labor force an upper hand over the local people. This has been made worse by the fact that they are free to shift their earnings to their mother countries (Vsesoi?uznoe and Znanie, 2007).
Conclusion and recommendation
Economic integration as a major factor in Globalization is and will remain the most important aspect in promoting economic growth internationally. 21st century being defined by levels of integration, Russia will need to holistically embrace the concept in order to assimilate greater and faster development. However, with President Medvedev indicating of strong consideration for reviewing of their relations with the EU, it is very uncertain of its relations in the near future. However, its relation with countries like China and the ASEAN appears to blossom. Therefore irrespective of the design, the future is only through integration. International trade on the other hand is reliant on integration to determine the extent and speed with which it grows and progresses to the next level. Therefore, countries should seek to ensure that they integrate faster to hasten their development. Therefore, the notion of level playing ground should be re-examined and the entire participating countries given equal chances to reduce the foreseen or perceived sabotage.
Reference list Labor
Allen, J. ; Gioacchino, G. (2007). Development on the ground: clusters, networks and regions in emerging economies. Washington: Routledge.
Clifford, M. ; Clifford, L. (2009). Globalization: Evaluation of economic, political and social cultural effects to Integrating countries. A journal of economic management, 42(13): 105-154
Joseph, E. 2003. Globalization and Its Discontents. London:Norton.
Marios, I. ; Spyros, H. (2007). International Business: A Global Perspective. London: Butterworth-Heinemann.
Robert, J. 2008. Future cast: How superpowers, populations, and Globalization will change the way you live and work. Washington: Martin’s Press.
Vsesoi?uznoe, O. & Znanie, I. (2007). International Affairs. New York: Sage.