Regionalism or regional cooperation has always been a significant part of the late 20th century’s global liberal economy. But never in previous decades was it as practical and talked about issue as it is today. The post-COVID world economic and political order was supposed to change how we operate business, economy and power. This, with a few significant turns of events in international relations, has paved the way for strengthening regional cooperation. Therefore, here we touch on all these pivotal events and try to encompass a new future of the global economy, changing the ground realities set during the Cold War.
Regionalism is when countries make alliances with neighbouring countries to either increase regional development or deter global threats. Till the pandemic, regional development was the reason for regionalism. However, the latter has become more evident after the pandemic and is regarded as the new normal for this decade.
During the pandemic, many countries closed their borders, hence trade; as a result, the global economy shrank by 4.3%. All types of economies, be they strong or weak, were affected by it. World leaders learned a big lesson to never solely rely on external help. Another term, “resilience,” was popularised. Until 2020, the world primarily relied on the US; however, due to China and India’s vaccine diplomacy, this image of the US got a bit shaken during the pandemic.
In 2022, Russia’s invasion of Ukraine made the world even more divided. All other countries did not unanimously support the US-EU alliance in support of Ukraine. The reason was simply Russia’s gas and oil supply. Some countries argue that the US-EU alliance only cares for their gains, but countries must look after their people’s needs. Countries from SAARC, such as India, Bangladesh and Pakistan, imported gas and oil from Russia even under the threat of US-EU sanctions. India and Bangladesh inaugurated a joint pipeline for deepened energy collaboration.
On another front, China’s growing aggressiveness towards Taiwan made US-allied countries start pulling out their operations from China. A new global cold war started brewing between the US and China over semiconductors. In a historic move, the current US president, Joe Biden, announced that the US will slowly start moving away from its dependence on China for importing electronic parts, especially the mighty microchip. The USMCA – a trans-Pacific partnership between the US, Canada and Mexico will also be utilised in regional production.
In the east, Japan, South Korea, and India have made massive investments in “reshoring,” where countries are pulling back their major businesses within their borders. Be it Japan’s $2 billion assistance package for reshoring businesses, India’s “Make in India” movement, or Korea’s 10% insurance coverage on business reshoring investments, the examples are off the charts. The collaboration between 11 ASEAN (Association of Southeast Asian Nations) countries became tighter. On top of it, Japan collaborated with ASEAN to fight the growing security, economic and cultural threats the US and China posed.
The oil-producing nations (OPEC) ignored sanction threats from the West and joined Russia to cut oil output to coordinate global supplies. Recently, Arab league nations reached a consensus with China to build a community for a shared future. The African Union (AU) now focuses more on regional development and has allied with China for capital and expertise.
In a world where the concepts of globalisation and regionalism appear to be gaining traction, it was only a matter of time before the link between these two seemingly opposing forces became a topic of discussion. Andrew Hurrell’s “One World/Many Worlds relationship” has since become the topic of much scholarly research and controversy. The two mainstream assumptions that appear to emerge from that debate are that regionalism poses a serious challenge and threat to
globalisation or that regionalism is based on globalisation and could only develop as it did because of it.
If, for the sake of argument, we define regionalism as “the impact of rising levels of regional social and economic exchange and the links between economic integration, institutions, and identity” and globalisation as “the internationalisation of production, capital flows, and markets, the emergence of transnational and supranational agencies, and the internationalisation of culture”, then it will become apparent, that the relationship between the two is not so much about regionalism challenging globalisation or building on it. Instead, it shows that the more critical aspect of this relationship is that regionalism serves as a stepping-stone to globalisation; that it provides what one might call a “safer” version of globalisation, providing the benefits of inter-state trade and exchange while also providing more protection than those states would experience in the global market.
When examining the link between regionalism and globalisation, the first common argument is that regionalism poses a challenge to globalisation. Some are concerned that regionalism may “inhibit multilateral trade liberalisation” and serve “as a form of resistance to globalisation and a platform where alternative norms and practices can be developed”. The issue thus posed is whether and “to what extent we are living in an emerging multiregional system of international relations”. However, the evidence against these assertions significantly outweighs them. First and foremost, while the term “the new wave of regionalism” has been used since the 1980s, the phenomenon itself is not new. Regionalism, like globalisation, has existed “from the development of the earliest political communities”; therefore, the issue of why regionalism might now represent a substantial threat to globalisation may appear needless. Furthermore, regionalism cannot be viewed as a threat to globalisation in the sense of being a substitute because regionalism and globalisation are, by definition, two completely separate ideas that cannot be replaced by the other. Globalisation, on the one hand, is a continual process impacted by all types of players, state and non-state, who are part of the international system. In contrast, regionalism is a more purposeful approach.
The second assertion by researchers studying the link between regionalism and globalisation is that regionalism builds on globalisation. The “multilateral framework in which the regional institutions arose” has frequently been critical to forming these bodies. On closer inspection, it must be said that this is at least somewhat correct. Globalisation’s technological revolution has undoubtedly provided a critical foundation for thriving regionalism. Without the increased ease with which nations and individuals may now connect or transmit and receive information, forming regional organisations of size, such as the European Union, would have been difficult, if not impossible. Furthermore, due to globalisation, “developments in one region inform and indeed feed into developments in others”, which has undoubtedly enhanced the demand for and necessity for regional collaboration. So, in some ways, it may be claimed that “regionalism emerges in response to globalisation”, and so regionalism builds on globalisation.
To conclude, the 2000’s rise of globalisation, which took millions out of poverty in the world, is declining in the 21st century due to the rise of regionalism. The US-centric world order also appears to decline as China and Russia actively threaten its position. Regionalism is expected to grow through this decade as global tensions rise.
Author- Sadekin Haider
