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ASSIGNMENT:

1. Compare the importance of

a.) Nationalism Regionalism

b.) Regionalism Globalization

c.) Globalism Religionalization

THE IMPORTANCE OF NATIONALISM

The second question - that of importance - is seemingly the easiest question to

answer. Nationalism has been used to explain earth-shattering events such as the

break-up of the Ottoman Empire, Austria-Hungary, and most recently the Soviet Union -

just to mention a few examples. Moreover, it is not just a force of the past; the Kurds,

the Basques, the Palestinians, and many other groups and conflicts testify to the

continued importance of nationalism. In sum, nationalism has behavioural

consequences which makes it well worth closer examination.

Still, it is possible to argue that factors other than nationalism was, and is, the

driving force behind the events ascribed to nationalism in the paragraph above. Maybe

economic variables best explain the collapse of the Soviet Union? Maybe religious

factors were more important than nationalism in the break-up of the Ottoman empire?

Maybe the Palestinian movement is best understood in term of the personal interests of

an elite?

Connor disagrees:

Explanation of behaviour in terms of pressure groups, elite ambitions, and

rational choice theory hint not at all the passions that motivate Kurdish, Tamil, and Tigre

guerrillas or Basque, Corsican, Irish, and Palestinian terrorists. Nor at the passions

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leading to the massacre of Bengalis by Assamesc or Punjabis by Sikhs. In short, these

explanations are a poor guide to ethnonationally inspired behaviour (p. 74)

Thus, Connor argument is that explanations in terms of relative economic

deprivation, elite theory, and rational choice are falsified by historical experience.

History shows that nations demand independence regardless of their economic situation

compared to the rest of the state. The Basque are better off than the rest of Spain; the

Irish were worse off than the rest of the United Kingdom. History, Connor claims, also

shows that religious and class bonds are weaker than ethnic ties. Witness, for instance,

the failure of Lenin's call to the working class not to participate in World War I, and the

failure of religious leaders to prevent Christians from fighting Christians in the same war

(p. 156). Finally, focusing on the elite cannot explain why the masses so readily acceptthe message of nationalism. True, the elite may exploit, and manipulate nationalist

feelings, but surely there must be something to be exploited in the first place. In short,

alternative factors are not powerful enough - we need to examine nationalism in order to

explain important historic events.

If the importance of nationalism is beyond doubt, its precise nature, its

relationship to other concepts (such as the state), its causes, its consequences, and its

future are more debated. Moreover, in order to say that nationalism was, and is, an

important facto in shaping history we must at the very least have a rough idea about

what nationalism is. This is the topic to which I now turn.

What is nationalism?

According to Connor, a "nation consists of a group of people who believe they

are ancestrally related" (preface, xiv). Nationalism, in turn, is defined as "loyalty to the

ethnic group" (p. 40). Loyalty in this context implies willingness to sacrifice, for instance

being willing to give your life to defend the group in a war. This definition of nationalism

should be sharply distinguished from patriotism (loyalty to the state). In relatively

homogeneous societies - like Germany, Japan and Norway - the two are easily

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confused, but in multi-ethnic societies there are many examples of conflicts between

loyalty to your ethnic group and loyalty to the state.

Having defined a nation and nationalism, Connor goes on to examine the causes

and the nature of these concepts. Why, for instance, do we believe that we are

ancesterally related to the members of our nation. The cause of this belief cannot be

rational evaluation of evidence, since the factual basis for arguing that, say, all Germans

descend from a common German Eve is clearly empirically false (p. 217). How, then, do

we explain why people believe in the myth of the nation and are nationalists?

One possible explanation is evolution. To explain this allow me to recall an

observation from Richard Dawkins' book The Selfish Gene (I here rely on my fallible

memory). Lengthy observation of a bird colony established the following facts: A bird-

mother would almost always risk her life defending her children against an intruder. A

uncle, however, was less frequently willing to risk his life to protect a single child,

although he was more inclined to do so when the lives of two or three children were at

stake. Finally, even more distant relatives would only defend the children if more than

four lives were threatened. In short, the closer the DNA resemblance, the more the bird

were willing to sacrifice. Why should this be so? The obvious answer is evolution. A

species with a DNA code that told it to sacrifice its life defending everybody - even other

species - would become extinct. In the same way, one might speculate whether human

willingness to make sacrifices for your relatives (real or imagined) can be explained by

evolution.

Connor does not speculate on the evolutionary causes of nationalism. He simply

notes that "its well-spring remain shadowy and elusive" (p. 92). Moreover, the precise

nature of the bond is also elusive, although in general Connor argues that "the national

bond is subconscious and emotional rather than conscious and rational in its inspiration"

(preface, xiii).

I have so far presented Connor's definition of nationalism and his discussion of

its nature and its causes. This leaves maybe the most important topic: The link between

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nationalism and the events claimed to be caused by nationalism (like the collapse of

Empires). Exactly how did the ethnic bonds between people lead to, for example, the

collapse of Austria-Hungary?

Being a strong believer in methodological individualism, I want to explain events

by reference to the individuals who were involved. The key question is thus what forces

make an individual behave as he does. The most parsimonious answer to this question

- that employed by economists - is rational selfishness. In short, people do what they

think is best for themselves. In this perspective, only two main variables explain

behaviour: aims and beliefs. Of course, one might go further - as sociologists often do -

to try to explain the aims and beliefs we have. For instance, there are hot and cold

mechanisms that shape our beliefs, and our preferences are also shaped by variousmechanisms. Wishful-thinking is an example of hot belief-formation (beliefs influenced

by what we want to be true); Incorrect beliefs about the distance to an object when the

weather is good is an examples of cold belief-formation (beliefs influenced by

systematic cognitive mistakes); and sour-grapes is an example of preference formation

(that we do not want what we cannot get). Regardless of whether we try to explain

preferences and beliefs, the key to the economist approach is the prediction that of all

the possible actions an individual faces, he will choose the one that he believes is best

at satisfying his aims. Using this frame, rational choice theorists have lately invaded

political science. My question is then: Where nationalism fit into this picture (if at all).

Being loyal to your ethnic group, Connor's definition of nationalism, is not a belief

- nor is it an aim. Instead, it seems to be an action inspired by emotions (the bond we

feel to those we believe are our relatives). And emotions are not the only factor causing

problem for the narrow economic view of man. Another factor is norms which influence

behaviour without being an aim or a belief. For instance, rational-choice theory cannot

explain why people vote (the effort is simply not worth the small amount of influence

from one vote), while norms of duty ("it is my duty to vote") may explain voting. In sum,

to the question of what drives human beings we can give three main forces: Interests,

passions and reason. [For more on this distinction see Jon Elster (1996): Doing our

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level best, The Times Literary Supplement, 29. March, pp. 12-13. Also available from

The Jon Elster Page at URL: www.geocities.com/hmelberg/elster.htm]

Interests are our selfish desires, and it is relatively obvious that our behaviour is

motivated by this factor - for instance, consumer behaviour. That we are motivated by

passions, should also be relatively obvious. For example, revenge and hate are rarely

rational, although often a powerful motivator for behaviour. Lastly, reason can be

associated with impartial rules: We want to have good reasons for our actions and we

feel that these reasons should go beyond pure self-interests. The reason we vote is

neither interests, nor passions, but that we think it is the right think to do.

What is the proper role of nationalism in this extended frame? As mentioned,

Connor believes nationalism is an action associated with an emotion. Emotions, in

general, have what one might call 'action tendencies'. As Jon Elster writes: " The first

urge of the envious person is to destroy the object of his envy or, if that is impossible, to

destroy its owner. The action tendency of shame is to hide or disappear; that of guilt, to

make atonements and repairs; that of anger, to strike: that of fear, to run; that of joy, to

dance." [Elster (1996), Rationality and the emotions, Economic Journal(September

1996), vol. 106 (438), pp.1386-1397. Also available from the Jon Elster Page.] The

'action tendency' of feeling related to a person, then, must be to protect and advance

that person; or more generally, to advance and protect the group.

Let me now return to the original question: What is the link - the causal

connections - between nationalism and the events ascribed to nationalism? Building a

new state can, in part, be viewed as facing a series of prisoner dilemma's problems. As

an example of this problem, consider the defence of a community. Could the community

be defended without a central authority with the power to coerce people? Without a

central authority, each individual would have to face the following question when a

potential danger loomed on the horizon: Should I leave my family and defend the

community? (Or, should I leave my family to fight for a new state?) Assume the payoffs

can be visualised in the following figure:

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Pal

Fight Not fight

Fight 7, 7 1, 10

Igor

Not fight10, 1 3, 3

The motivation behind these payoffs is that if none of us fight, we will end up in a

relatively bad situation (occupied, but alive; everybody gets 3). If only Igor fights there is

a high probability that he will die, but he will also defend the country so Pal can live in

freedom (so, Igor's expected payoff is 1, while Pal gets 10: freedom and no fighting). If

both fight, they greatly reduce the probability of dying, and the expected payoff to each

is 7 (fighting is costly, but liberty is good).

What will Pal and Igor choose? A rational and selfish person, say Igor, would

reason as follows: If Pal fights, it is best for me not to fight (I get 10 instead of 7). Now, if

Pal chooses not to fight, it is also best for me not to fight (I get 3 instead of 1). So,

whatever Pal chooses it is best for Igor not to fight, and this is what he will choose. But

the same reasoning applies to Pal, whatever Igor does, it is most profitable for him not

to fight, so this is what he will do. The end result is that both choose not to fight and they

both get 3 in payoff. The paradox, of course, is that they could have done much better if

they both had fought (get 7 each). But this solution is not available, if one person

chooses to fight the other has an incentive to cheat - to avoid fighting, to make the other

person carry the burden while you free ride. This shows how individual rationality can

create collectively disastrous results.

What is the solution to this problem? If a state is created with the power to punish

those who cheat, this will change the payoffs so as to make it profitable to fight. In this

way the state can solve the problem of the prisoner's dilemma (as it is called).

Moreover, defence is not the only example of a how individual rationality may create

collectively disastrous results. To mention a few examples: Individually fishermen have

an incentive to fish too much; factories an incentive to over-pollute; and people an

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incentive to under-invest in prevention of epidemics. Faced with these problems most

countries have opted for some kind of state intervention.

In what way does nationalism affect the story above? Recall that Connor defines

nationalism in terms of willingness to make sacrifices for the group. Within my frame,

there are at least two ways of visualising this. First, to say that people will choose to

fight even when it is not in their material interests. Second, to argue that being a

nationalist changes that payoffs, so that it makes fighting more profitable - for instance

by including psychic gains from fighting on behalf of your group. In any case, the point is

that ethnic bonds between people can make the co-operative solution more likely since

it makes individuals more willing to make sacrifices on behalf of the group. This shows a

more detailed picture of how nationalism can explain the collapse of empires: Asnationalism grows in new nations, more and more people become willing to make the

sacrifices necessary to fight for nationhood - scarifies that are individually not profitable

but because of nationalism people are no longer propelled solely by selfish and material

cost-benefit considerations.

Can nationalism be studied scientifically?

A person can accept that nationalism is both important and roughly definable,

but still doubt the utility from studying nationalism. This, of course, depends on the aim

of our study. Three such aims are: to explain (historical events), to predict (future

events) and to recommend (finding policies to deal with nationalism).

One reason why focusing on nationalism may run into problems on all three

accounts, is that explanations based on emotions are very hard to quantify. Consider

the following competing arguments:

1. "Person X did Y since his aim was to become rich and action Y was believed

to earn him $1000"

2 "Person X did Y because his emotions made this the most profitable actions"

(Or, "because his emotions made him do Y")

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The first argument can be tested, since it is possible to examine what the person

would do if he received less than $1000 to do Y (e.g. give less blood the less you are

paid). The second argument has a circular quality (everything can be explained by

saying that "he felt like doing it"), and it is much more difficult to test. The monetary

payoffs are observable, the emotional payoffs are not. This is one reason why

explanations based on emotions may be less reliable than rational choice explanations.

Lack of quantifiability, and lack of a formal mathematical model, also makes

predictions difficult. Rational choice supporters, on the other hand, have the advantage

that they can make predictions based on the "as-if" assumption. That is, when they

make predictions they need not assume that people actually are rational, only that they

behave "as-if" they were rational. For instance, if we were to predict the shot and angleof a pool-player, we might find that a quite complicated mathematical model accurately

predicts the strength and angle of his shot, but we need not claim that the pool player

actually goes through these calculations in his head before he makes the shot. There is,

I think, no similar argument available to make predictions based on emotional

behaviour.

Finally, policy recommendations may also be best when we use a framework

based on the belief that people respond to material incentives. For example, assume

that you want to reduce the crime rates in a country. Two alternative proposals are then

put forth:

1. To try to change people's norms and attitudes

2. To increase the sanctions (e.g. increase tickets for speeding)

The effect of these measures do not only depend on whether people are

motivated by norms or rational cost/benefit calculations when they commit crimes, but

also on the ease, predictability and relative efficiency of changing norms vs. incentives.

One may even admit that emotions are very important in certain kinds of crime, but as

long as there is some element of cost-benefit considerations the net payoff from

focusing on changing the incentives may be much larger than the net payoff from trying

to change attitudes. The simple reason is that it is hard to change attitudes (since the

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causal mechanisms are relatively uncertain, and - moreover - it may take a long time

and be very costly), while it is easy to change the sanctions.

Return now to the original question: To what extent can nationalism be studied

scientifically? I have so far made general arguments to the effect that the lack of

quantifiability and precise models makes this study difficult - whether your aim is to

explain, to predict or to recommend. In the following I want to make this argument a bit

more precise, as well as discussing Connor's arguments on the possibility of scientific

study of nationalism.

On several occasions Connor seems very sympathetic to the argument that

nationalism cannot be studied scientifically. For instance, he discusses an article by

Ladis Kristof to the effect that: "Dissection and logic, even in concert, may prove not

only inadequate but misleading when applied to the study of sensory loyalties" (p. 112).

Similarly, he quoted Freud who writes about "many obscure and emotional forces,

which were the more powerful the less they could be expressed in words" (p. 203).

Finally, Connor himself writes that "... nations, national identity, and nationalism are 'the

stuff that dreams are made of,' and this helps to account both for their emotional appeal

and for their resistance to rational inquiry" (p. 210).

This does not imply that the study of nationalism is worthless. As Connor argues,

nationalism "can be analysedbut not explained rationally" (p. 204, my emphasis). By

analysed, he means that it is possible to examine "the type of catalysists to which it

responds ..." (p. 204). In short, what factors make nationalism grow or decline, and what

factors shape its form. This kind of examination is possible within a "normal" scientific

frame, using historical examples, surveys and statistics.

I am not too convinced by the argument that emotions are resistant to rational

investigation. Too see why we must distinguish between rational (or scientific)

investigation and explanations based on rational choice. Given a set of evidence, I may

rationally conclude that a person was motivated by love (or hate) when he did X.

Rationality or scientific investigation, is then simply a way of evaluating evidence. There

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is nothing inherently impossible in "rationally" concluding that people sometimes are

"irrational" - in fact there is a great deal of evidence which points in this direction (see,

for instance, experiments by Kahneman, Slovic and Tversky).

Conclusion

I started with the question of why I should be interested in nationalism. While I

think nationalism both has important consequences, and that it is possible to gain a

rough understanding of what it is, I am less certain whether a focus on nationalism is

"useful" if the aim is to find reliable scientific theories that can be used to shape policy.

Assume, for the sake of argument, that we after much work have a "scientifically" good

argument that the situation in Kazakhstan would improve if they started to follow the

civic model of national integration. The problem, of course, is that the elite need not bemotivated by the "scientifically" best policy, but simply by more brute considerations of

what is best for the elite and how they can maintain their power. In sum, I am not yet

convinced that the study of nationalism is useful from a policy perspective, but I am

more convinced that it is important from a historian's standpoint - to explain historical

events. However, even there doubts remain about its reliability. But, then again, no

explanation is certain!

THE IMPORTANCE OF REGIONALISM

In "New Regionalism: How Globalization Reorders the Three Worlds

of Development," Reynolds provides an intellectual methodology for

focusing beyond national macroeconomic policy so that the particular

policy needs of localities and regions can be analyzed and addressed.

The article highlights the importance of local and regional institutions

and political, financial and civic leaders. It encourages their inclusions

in policy making. It emphasizes the interdisciplinary factors involved in

development economics analysis and policy making at the local and

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regional level.

"Regions are endowed with different cultures, historical backgrounds,

climates, proximity to national and world markets, and endowments of

natural resources. Increased international exchange and the regional

integration of national economies may well cause clashes among

cultures, races, gender groups, workers and management, regional

versus national authorities, and those who espouse different economic

systems.

The "Three

Worlds" of

globalization:

The three worlds of Cold War analytical discourse

have thankfully become irrelevant with the end of that

conflict.

&

The current world

order has divided

itself in general

terms into three

segments based

on "a new pattern

of international and

interregional

economic

stratification"

similarly useful for

current analytical

discourse.

There is a clear new pattern now, Reynolds points out.

This current world order has also divided itself in general

terms into three segments based on "a new pattern of

international and interregional economic stratification"

similarly useful for current analytical discourse. These

three segments "show patterns ofconvergence and

divergence among nation states and their subregions."

&

The Cold War "First World" remains - defined now by its

advanced economic and political development. However,

the nonaligned Cold War "Third World" has divided into

those nations that to some substantial extent have aligned

themselves with globalization and the processes of

economic development and those that in general terms do

not participate in any meaningful way in international

commerce and thus fail to develop economically or

politically. The Cold War Soviet bloc "Second World" has

disappeared - its constituent parts similarly spinning off

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into these two economic development spheres - some

even migrating into the European Union and eventual

"First World" status.

&

For purposes of analysis, Reynolds regroups these

nations from the Cold War second and third worlds into a

postwar grouping of "Second World" developing nations

and "Third World" nations with little or no participation in

international commerce and thus little or no economic

development. (These Third World nations remain

chronically undeveloped despite decades of massive aid

flows and hectoring advice from international institutions.)&

He then goes several steps further to group localities and

regions into these categories to facilitate consideration of

Third World regions and localities that may exist even

within and across the borders of First World and Second

World nations. Similarly, there are localities within

economically Third World nations that rate Second World

or even First World status. Reynolds mentions many

examples - most noteworthy the differences among

regions and localities within China, India and Mexico.

&

The "New Regionalism" is offered by Reynolds in the

hope that identification of Third World regions and

localities within Second World and even First World

nations will help focus analysis and direct policy

responses appropriate to their needs. It is his hope that

First World assistance and creativity will find ways of

encouraging the development of the "enterprise, civil

society and good governance" needed by Third World

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nations in place of the coercive and populist governance

they currently suffer from.

&

The good news is that the economic First World

continues to widen. "High income/high productivity"

regions now include even "enclaves of prosperity" in

emerging nations, as well as in areas of Russia, eastern

Europe, eastern China, major parts of Japan, and in Hong

Kong and Singapore.

&

More good news is found in the increasing ranks of the

economic Second World. These "emerging marketregions" include large parts of eastern China, some key

provinces in India, sections of Mexico's northern states

and a few other of its subregions, and areas of Brazil, and

Argentina, among others.

&

But there is still a disappointing Third World - still falling

behind - still failing to participate in international

commerce - and still continuing to lack the political,

economic and societal essentials for the development of

prosperous market systems. Typically, in these states, the

politically influential flourish, rent-seeking activities are

widespread, and the people's commerce is of little or no

concern to government.

"[Political] elites and private wealth-holders who capturea large share of the growth dividend often operate out of

short-term self-interest rather than long-term stability and

sustainability. They fail to address the needs of those in

the developing regions of their own countries -- part of

today's 'New Third World' -- just as the beneficiaries of

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globalization in the First World tend to ignore those who

lag behind at home as well as abroad."

The importance of competent, "far-sighted"

leadership is stressed by Reynolds. Governments must

not only facilitate commerce at the national level, they

must analyze and overcome particular barriers to

participation and the financial obstacles within their

subregions. They must cushion the adverse impacts of

change to defuse opposition. Reynolds mentions as an

example the allocation of funds from rapidly developing

eastern regions in China for construction of railroad links

in the western provinces.

"The old school of development economics no longer

commands center stage, having made its major

contributions during the period of post-World War II

reconstruction and the Cold War. The new approach must

factor in regional differences in comparative advantage

based on different endowments of natural and humanresources, social access, technological know-how and the

limitations that arise when a labor-abundant region subject

to a dominant currency can't devalue to match its lower

productivity."

Reynolds mentions some of the myriad policy areas

that may need attention by particular nations and regions.

These include agricultural protectionism, aging

populations, declining industries, minority groups and

migrant workers, macroeconomic constraints and policies,

education and physical infrastructure, tax policy, access to

national and global markets, access to financial capital,

institutional and cultural change, safety net provisions to

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cushion the problems inevitable with rapid change, and

much more.

&

Globalization is a complex, many faceted economic

structure. Productivity governs demand - today's

production provides value for yesterday's savings - both

productivity and production increasingly rely on an

interdependent global market system. And as always,

human capital is the vital ingredient that provides the

"entrepreneurship, creativity, leadership, and hard work"

that makes the system function.

"Cultures matter as well, and history, and the psychology

of expectations. So entrepreneurship must be cultural as

well as economic, and politics must reflect a broader

spectrum of interest, even though this may slow the

process of exchange. Solutions in a second-best world

must be second-best."

Each locality and

region has its own

peculiar mix of

advantages and

disadvantages that

must be addressed

with suitable mixes

of policies.

The unequal nature of the global economic advance

is emphasized by the author. Each locality and region has

its own peculiar mix of advantages and disadvantages

that must be addressed with suitable mixes of policies.

Indeed, that is the reason that he developed the "New

Regionalism" analytical framework.

"Each region has its own character, resources, and

conditions of supply and demand that determine its

economic potential. But the long-term competitiveness of

a region may differ sharply from its short-term conditions.

A region's long-term potential can be transformed into

short-term competitiveness -- long term comparative

advantage becomes short-term competitive advantage --

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by the right mix of technology, entrepreneurship, risk-

taking finance, and public policy to provide the necessary

economic and social infrastructure."

Revenue sharing is an important policy tool, but can

easily be overdone.

"Russia and Argentina provide examples of the noxious

impacts when all or most revenues for regional

governance come from the central government.

Separation of local and regional spending authority from

the responsibility for revenue generation can destroy the

incentive for conscientious efforts by local and regional

officials to facilitate local and regional commerce."

Risk-taking should properly be left in private hands.

Government should not pick winners and losers. However,

government and non-government organizations at local

and regional level have vital roles in coordinating

business, labor and community interests, facilitating the

people's commerce, and attending to the financial, fiscal

and infrastructure needs of backwards regions.

"For those

economies that

wish to enter the

global race to

prosperity it isnecessary to open

up access in terms

of laws and

institutions that

"This is where an inclusive approach to development

economics meets the new regionalism. It requires

cooperation and far-sighted planning to provide education,

infrastructure, access to technology, credit, and

information about future opportunities at home and abroad-- including other regions in the same nation state."

Migration policy is an obvious area where national policy

must be tailored to suit regional and local conditions.

Reynolds points out, for example, that NAFTA fails to

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provide the basis

for those

enterprises that

prove able to take

advantage of the

expanding world

market."

consider local and regional factors, but this omission is

mitigated somewhat by cross-border cooperation among

civil authorities, employers and labor organizations.

"Much depends on access to the market and on

institutions that ensure a level playing field for those in a

world that looks flat but is really uneven. Access is

everything. For those economies that wish to enter the

global race to prosperity it is necessary to open up access

in terms of laws and institutions that provide the basis for

those enterprises that prove able to take advantage of the

expanding world market.

Small businesses and large businesses play a role, as

well as foreign investment and mergers to help access

markets. Innovation, branding, and the ability to access

expanding global demand are among the ways that firms

enjoy sufficient receipts to earn increasing profits, pay

higher wages, improve the quality of products, innovate,and provide safeguards for the environment - "and avoid

the pitfalls of 'commodity hell' -- in which all goods and

services are reduced to generic commodities, and the

entrepreneur is relegated to a bureaucrat."

"In this paper I call for legal and institutional change to

spread the benefits of growth more broadly and to open

access to all. But there is immense skepticism about

political regimes that are slow to act for interests other

than their own, about cultures that reinforce stagnation

and repression, and appeals to traditional values that

foster reaction."

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Fortunately, prosperity has enabled the beneficiaries of

First World prosperity to entertain philanthropic

tendencies and concerns for the less fortunate. But that

concern must be guided by analysis with a regional and

even a local focus if it is to generate effective assistance

policies.

THE IMPORTANCE OF GLOBALIZATION

A famous economist, Joseph Schumpeter, once discussed the nature of

capitalism. To him, capitalism is creative destruction, a way of responding to major

waves of technological change. The United States has represented the incarnation of

this ideal and will continue to do so in the future. Capitalism relies on the free flow of

information and goods. This is key not only to domestic economies but to the global

economy as a whole. This week there will be a meeting of both the IMF and the World

Bank. Just as Seattle was lined with protesters that did much to hamper any progress

that could be made at the WTO meeting last November, protests are planned at the IMFand World Bank meetings.

Most protestors come with a purpose; to protect the environment, to prevent

child labor, to protect industries. Others claim that globalization will exploit weaker

nations or steal markets from the richer. The sad thing about all of this is that the

protests do little to aid their causes and in most cases, actually end up hurting the world

in general. To see what I mean, let me give my take on each of these issues.

(Granted, I am strongly biased in my opinion.)

The environment. Let me start off on the right foot, I strongly believe in

protecting the environment, and I hope I can make this evident. Increasing trade will

hurt the environment. Where's the argument? Businesses tend to hurt the

environment so we should make sure that growing nations like China will not grow so

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they won't hurt their environment. There is some truth to this argument. The industrial

revolution in Britain churned up so much smoke and soot that the trees were lined with

black soot. It had disastrous effects for the environment and for the health of the

English population. What happened? Progress happened, simply put,and the British

passed a certain level of income. This development led them to stop worrying about the

bare necessities like food and clothing, and they began concerning themselves with

other goods such as clean air and water (yes clean air and water can be thought of as

goods; they are called public goods.). Economists can show that for pretty much every

country, this is true. Once individuals in the country reach a certain level of income

(now it is around 4-5 thousand), they began to spend more on public goods. It makes

intuitive sense that if I can provide for my family, I am more willing to spend to protect

the environment. This trend pushes the idea that we should allow all nations free

access to the global economy so that they can grow and develop. The richer a nation

is, after this 4,000 to 5,000 income level, the more concerned it will become about

protecting the environment. Therefore it is vital that the developed nations aid the

undeveloped through freer markets.

What about child labor and the world's poor? Globalization is not to blame for

the domestic policies of one nation. The Chinese government should be responsible for

making sure that its citizens are safe and healthy. Trade is often used as a bargaining

chip, but what people don't realize is that it's a costly chip. Not only for the US, but for

the world's poor as well. Why use economic sanctions and trade barriers to force a

government to change its domestic policies towards the impoverished? These

sanctions themselves hurt the poor. I am not a politician, but there has to be a better

way. In a recent article, the Economist magazine was quoted as saying, "Governments

are apologizing for globalization and promising to civilize it. Instead, if they had any

regard for the plight of the poor, they would be accelerating it, celebrating it, exulting in it

- and if all that were too much for the public, they would at least be trying to explain it."

(Which is what I am attempting to do.)

Capitalism is creative destruction. Some industries are inefficient, and

sometimes resources are re-allocated with freer flows of trade. What people have to

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realize is that international trade doesn't represent a threat, it represents an

opportunity. Short term losses are always outweighed by the long term gains from

trade. This opportunity is for increased gains from trade and a more efficient and

productive economy. This is not a new concept. It was introduced hundreds of years

ago by a man named David Ricardo as comparative advantage, and today it is the

cornerstone of all international economics. The idea is simple, that increased trade will

lead to higher productivity and more prosperity.

Often the argument is made that globalization exploits developing nations or

globalization will hurt the developed countries as jobs will be lost to cheaper working

competitors. Ross Perot mentioned a "great sucking sound" as NAFTA would cause

US jobs to make a run for the border. NAFTA's been around. Neither Mexico nor theUS has experienced either of these two effects. In fact, the economic effects of NAFTA

have been positive, if anything. Economics can show that freer trade, if it has any

effect, will have a positive effect for both nations. Developing nations, where economic

growth is so important, especially should gain from freer trade.

International cooperation is key to the success of the world's economy. The

purpose of this article is to attempt to dispel some misinformation in one of the most

pressing economic issues of the day. Globalization is a source of progress and not

harm. Countries are nothing but lines on a map. People are people, and there's no

reason why in today's world a large proportion of the world's 6 billion should have to live

below the poverty line.

THE IMPORTANCE OF GLOBALISM AND REGIONALISM

Two major trends are affecting the international economic system today:

globalization on one side, and regionalization and regionalism on the other side.

Much literature has so far studied the interaction between these two attitudes in the

international politico-economic framework. This interaction is indicative of a significant

factor which has greatly affected the developments in the world economic order,

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particularly after the World War II and the Uruguay Round.

In this article we attempt to identify the strategic interrelation between globalization and

regionalization. The main question here is: What impact has the globalization process

had on the regionalization of economic relations? Will the developments caused by

regionalization accelerate the globalization process, or slow it down?

Any analysis of the economic globalization should be made in the framework of

an international system, emerged after the Cold War; because following that period all

international issues are looked into from an international perspective which is much

different from the past.

New Wave of Regionalization: Major expansive political, economic and

technological developments in the world have caused new definitions to be set forth for

economic and trade growth which is driven by the attitude to regionalize economic

relations among nations.

These developments include interdependence at international level;

international productivity; end of militarism and the bipolar strategy; emergence of an

international tripolar trade system with its centers in Europe, Southeast Asia and

America; and the extensive economic and political presence of new industrial nations.

After the Cold War, globalization prompted countries to enter into regional groupings in

a bid to gain a more economic maneuver power.

The first wave for regionalization of trade and economic relations after the

World War II emerged in Europe. The United States fully supported this trend in 1950s

in the framework of the multilateral hegemonic orderwhich it initiated after the War.

Since 1980s and especially in 1990s a new, growing wave of regionalizing trade and

economic relations emerged both in industrial and developing countries in form of

NAFTA, APEC and other regional pacts. At a theoretic level, regionalization can be

viewed in various ways:

1. As a reaction against globalization of economy

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2. As a preliminary phase in globalizing foreign trade and economic relations and to

accelerate the world economic unification

3. As a strategic choice (for the US) vis--vis the problems that international economic

development system has created.

Globalization Vs. Regionalization: Some economic and political experts

believe that globalization is related to a set of international elements which accelerate

the interaction and interdependence between governments and also between civil

societies at the politico-economic international system.

Organization for Economic Cooperation and Development (OECD) states that

globalization is mainly indicative of a trend which includes the development of

international trade and foreign direct investments, growing internationalization of

monetary, financial and credit markets and also the growth and development of foreign

capital markets.

In this perspective, globalization of economy is referred to as sectorial

economic unification process which necessitates a deep interpenetration of national

economies and also a direct advanced competition between them.

MacEwan states in Between Globalization and Nationalism, Socialist Register that the

globalization of economy is moving toward development and more expansive, free

international distribution without any limitation in trade and economic relations.

However, economist Paul Krugment defines globalization as opening of the national

markets to international trade.

In order to explain how to benefit from globalization, it is assumed that free

transfer of economic resources including capital, labor and also competition will

encourage economic and technological cooperation between economic systems of

participating countries.

Many definitions have so far been proposed for the process of regionalization of

trade and economy. Some authors believe that this process is initiated in a specific

geographical area between countries which have accepted common values among

themselves and base their foreign economic relations and policies on these accepted

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values. Seeking a common identity could be another motive for countries which

regionalize their economies. These countries have a feature in common: They adopt

discriminatory privileges and procedures against non-member countries.

In a general perspective, regional settings are based on the followings:

1. Gaining interest through increasing incomes and more effective regional production

system

2. Achieving more political and economic power in negotiating with other regional

groupings, and

3. Facilitating economic and political cooperation in the framework of regional unions.

Finally, various forms of regional settings include:

1. Joint ventures in specific manufacturing sectors

2. Free economic zones

3. Customs unions

4. Common markets

5. Economic and political unions

The birth of WTO has been a giant stride toward globalization of economy and

trade, but despite this success, many blows have been exerted on the collective and

multilateral liberalized trade as basis for free world economy by the new wave of

regionalization.During the 1980s and especially in 1990s the growing partnership between

countries both industrial and developing has played a major role in creation of new

regional economic blocs.

It can now be concluded that undermining pluralism and multilateral system in

the world economic negotiations and the growing rise of regional economic and trade

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ties indicate a sort of resistance against globalization. Meanwhile, the interaction

between regionalism and globalization are quite obvious, but very complicated. In other

words, in spite of the fact that eye-catching progress has been made toward further

regionalization of economic ties, the trend of globalization is a much powerful and

nonstop preference at international level, specifically in financial and monetary

structures as well as manufacturing.

Impact of Globalization on Economic Regionalization: The viewpoints of experts

regarding the positive and negative impacts of globalization on regionalization of

economic ties are quite mixed. Advocates of globalization argue that this trend can bring

the underdeveloped and developing economies in a united trade system in which

members are equal and do not sustain any discrimination. Thus globalization canencourage the benefits of trade for both developed and developing countries.

It should not be forgotten that the level of positive effects of globalization by both groups

of countries totally depends on the competitiveness and economic power of them,

meaning that industrial countries are the first who would get the benefits of globalization

while poorer countries may sustain great losses as a result. Therefore, globalization

may bring about two completely opposite phenomena: encouraging economic and

political unification of countries into an international system and escalation of economic,

political and social instability in member countries.

The resistance of vulnerable countries which are at a lower level in terms of

power and competitiveness would appear in form of regional economic associations.

Advocates of regionalization are seeking to somehow reduce the above-said negative

impacts of globalization. Regionalization is aimed at preserving the economic power,

national and regional competitiveness of countries which have felt to be threatened by

globalization.

Regional resistance movements are especially supported and encouraged by

national beneficiary groups and companies which cannot match their foreign rivals in

terms of competitiveness.

In another viewpoint, regionalization can be looked at as a strategic choice. In

this line the policies for creation or strengthening regional associations are reviewed

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based on the principle of convergence of interests in the economic, political and trade

dimensions between multinational companies and their respective governments.

This alignment of governments and multinational companies interests are basically

aimed at preserving and encouraging the responsiveness of countries to structural and

fundamental developments which occur in the international economic system. This is

not limited to developing countries, but occurs in large industrial nations.

On the other hand, pursuing the objective of raising competitiveness of countries in the

international system has brought about unsecured economic and manufacturing

conditions. These negative impacts could lead to huge economic, social and political

crises in developing and less developed countries and even, in a limited form, in

industrial countries. The progress of computerized communications and information

dissemination has created such conditions under which the economic power depends

less on manpower and is instead dependent on exploiting computer information

technology properly. This has led to lowering the living standards of labor force

especially in developing countries. To combat such poor conditions some countries

have decided to protect their domestic industries in resistance against economic

globalization.

The objective of regional economic blocs which are the foundation for moving

toward regionalizing trade and economic ties, is mainly creating of a sort of harmony

among the following opposing objectives:

1. Further expansion of predicted benefits and privileges of flexible specialization

2. Protecting domestic and regional industries which have relatively lower competitive

power.

Also, the globalization of economy in some dimensions has led to declining the

countries political power. In spite of the fact that globalization is a solution to economic,

political and environmental problems which necessitate a collective and global

management, in some cases it has led to undermining political interests of national

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governments. Because of such negative impacts of globalization, it is expected that the

international politico-economic system would witness conflicts between economic blocs.