The Global Integration Algorithm: Directing the Forces of Gravity

The power of regional economic integration does not solely rest in expanding the growth opportunities for its members via lowering trade barriers and making goods cheaper for consumers. There are crucial external dividends that are reaped by successful and dynamic integration blocks, whereby the soft power as well as the gravity pull of the expanding economic block improves the conditions for trade and investment with the outside world. 

In economic integration success breeds success in many respects, including in terms of creating a sufficiently large economic mass whose gravity pull (in terms of the “gravity model” in international trade) becomes progressively stronger with respect to neighboring economies.

A case in point in this respect is the evolution of EU integration that followed the pattern of building a critical mass of large economies in Europe (France and Germany as the key heavyweights), which served to attract trade flows away from neighboring economies – the result of the gravity pull of trade flows was the so-called “domino effect” that led to more and more European countries opting to join the ever expanding and massive European Union. Times have changed since, and with the EU facing the Brexit challenge, the next “integration growth” cycle may be performed by the Global South, whose nation states and integration blocks are still largely fragmented, most notably in Eurasia.

The current system of a well-integrated developed world and a largely fragmented Global South may persist for quite some time lest the developing economies step up their efforts to bring together their existing integration blocks within unified integration platforms. The first undertaking in this process could be directed at building a critical mass first in Eurasia via bringing together India, China, Russia within an enlarged Shanghai Cooperation Organization (SCO+), which forms the basis for attracting other regional blocks of the Global South in Eurasia such as ASEAN into the most extensive platform for developing countries in the continent. This also forms the basis for engaging the EU into more active economic cooperation with the developing economies of Eurasia, while at the same time an enlarged SCO+ could also facilitate the creation of a global platform for South-South integration either on the basis of BRICS+ or TRIA (see Y. Lissovolik, Valdai, 2018).

Russia and the Global Economy
Imago Mundi: A South-South Concert of Continents
Yaroslav Lissovolik
In exploring the barriers to growth in the world economy one striking feature is the difference between developed and developing economies in terms of the scale and depth of economic integration. This is not necessarily limited to the number of trade agreements concluded by advanced economies vs developing nations, but relates to the broader qualitative challenges in the patterns of South-South cooperation.
Expert Opinions

The corresponding sequencing of building a global framework of South-South cooperation that becomes significant enough to engender full-scale cooperation with the developed world may progress along the following stages:    

  • The Russia-India-China triangle: closer coordination among India, Russia and China in promoting SCO as the core integration platform for the developing economies of Eurasia

  • The Grand Eurasia: building an enlarged “SCO+” framework that is large enough to engender closer ties with the EU in building a pancontinental alliance and forging ahead with connectivity integration

  • The integration of the Global South: building a BRICS+/BEAMS and/or TRIA framework that attracts other regional blocks from the developing world into forming ever broader coalitions and mega-blocks of the Global South

  •  A global North-South global platform: an enlarged integration platform of the Global South is likely to exert a “stronger gravity pull” vis-à-vis the  developed world, including with respect to coordinating the creation of North-South integration frameworks/fora

It hence appears that there is a certain sequencing that could be followed in building a more balanced global economic architecture. The most important part of the sequencing has to do with addressing the fragmentations and gaps in the regional layer of global governance (most notably within the Global South) that has become increasingly critical in the past decades for development and maintenance of macroeconomic stability. The attainment of a more coordinated framework in the relations between developed and developing economy integration platforms is unlikely to exhibit breakthroughs without more active steps on the part of the Global South towards forging South-South integration. For the developing world the two key integration tools in attaining greater connectivity with the developed economies have to do with the SCO+ framework (for building cooperation with the EU in Eurasia) and the BRICS+ framework (for engendering greater cooperation from the developed world at the global level).

In the end, sustainable globalization or economic integration is unlikely to be secured solely at the level of global economic organizations and without progress in building a coordinated framework among the largest regional integration arrangements. Rather than performing minor adjustments to the system of global institutions, a comprehensive revamping of the regional layer of global governance and its greater consistency with other layers of global governance, may be the key to a successful restructuring of global economic architecture. 

Trade Wars And Protectionist Policies (VIDEOGRAPHICS)
Nowadays, we hear about sanctions almost as frequently as about war. They are a means of influence characteristic for protectionism. Its goal is to force trade partners to change their political course. But most experts consider protectionism a negative phenomenon, unlike free trade policy, which contributes to economic development.
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