Chapter-Three

3.International Political Economy/Global Political Economy, Globalization & Regionalism

1. Meaning and Nature of International Political Economy (IPE)
 “is the study of the tension between the market, where individuals engage in self-
interested activities, and the state, where those same individuals undertake collective
action” that means economic or market-based activities and political or state-centered
ones.
 is“a strained state or condition resulting from forces acting in opposition to each other”.
that states and markets relate to one another in fundamentally adversarial ways or
relationship between the two is often antagonistic.
 is a field of inquiry that studies the ever-changing relationships between governments,
businesses, and social forces across history and in different geographical areas.
 it consists of two central dimensions namely: the political and economic dimension. A
political dimension accounts for the use of power by a variety of actors, including
individuals, domestic groups, states (acting as single units), International organizations,
nongovernmental organizations (NGOs), and Transnational corporations (TNCs) while the
economic dimension, on the other hand, deals with how scarce resources are distributed
among individuals, groups, and nation-states. Today, a market is not just a place where
people go to buy or exchange something face to face with the product’s maker.
 Generally, it analysis of the relationship between economics and politics i.e Resource and
power/market or state.
2. Theoretical perspectives of International Political Economy
There are three major theory of International Political economy/GPE: liberalism, Marxism,
and nationalism (mercantilism). Many scholars point to Friedrich List(1789–1846) as the
intellectual father of the mercantilist thought and it is a thought in response to classical
economics and, more specifically, to Adam Smith’s (1723–1790) liberal perspective. Marxism,
by contrast, is the youngest of the three and is advanced by Karl Marx who also emerged as a
critique of classical economics.
a. Mercantilism/nationalism: is a theoretical and ideological perspective which defends a
strong and pervasive role of the state in the economy – both in domestic and international
trade, investment and finance. In arena of international trade, for instance, mercantilism
emphasizes the importance of balance-of-payment surpluses in trade with other countries and to
this end it often promotes an extreme policy of autarky to promote national economic self-
sufficiency. Mercantilists, states should also play a disciplinary role in the economy to ensure
adequate levels of competition.
b. Liberalism: is a mainstream perspective in International political economy and it defends the
idea of free market system (i.e free trade/trade liberalization and free financial and Foreign
Direct Investment (FDI) flows). Accordingly, removing impediments (barriers) to the free flow
of goods and services among countries is the foundational value and principle of liberalism. The
consensus among advocates of free trade is that it reduces prices, raises the standard of living for

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more people, makes a wider variety of products available, and contributes to improvements in
the quality of goods and services.
c. Marxism: Following the collapse of the Soviet Union in the 1990’s and the apparent embrace
of the free market economy by a significant number of developing countries, there was a widely
held belief that such phenomenon marks a clear failure and hence death of Marxism. However,
while it is certainly true that central planning in command economies (which was what existed in
Soviet Union and other so called socialist/communist states- they were not true communists
though!)has proven to be a failure, it is not necessarily true that all or even most of the Marxist
critique of capitalism has been negated by any historical and contemporary realities. In
particular, they all reflect the inherent instability and volatility of a global capitalist system that
has become increasingly reliant on financial speculation for profit making. Some actors are
always making huge sums of money from the speculative bubbles that finance capitalism
produces, and this is creating the illusion that everything is working well. Give all the above
realities about contemporary International political economy, therefore, the report of
Marxism’s death is greatly exaggerated. Global north vs global south
Contemporary Theories of International Political Economy
There are three IPE contemporary theories/approaches
1. Hegemonic Stability Theory (HST):is a hybrid theory containing elements of mercantilism,
liberalism, and even Marxism. The basic argument of HST is simple: the root cause of the
economic troubles like Great Depression of the 1920s and 1930s was the absence of a
benevolent hegemony—that is, a dominant state willing and able to take responsibility (in the
sense of acting as an international lender of last resort as well as a consumer of last resort)for the
smooth operation of the International (economic) system as a whole.
E.g. During the Great depression -old hegemon -Great Britain, had lost the capacity to stabilize
the international system, while the new (latent) hegemon-the United States, did not yet
understand the need to take on that role—or the benefits of doing so-hence global economic
instability.
2. Structuralism: is a variant of the Marxist perspective and starts analysis from a practical
diagnosis of the specific structural problems of the international liberal capitalist economic
system whose main feature is centre-periphery (dependency) relationship between the Global
North and the Global South which permanently resulted in an “unequal (trade and investment)
exchange.” It advocates for a new pattern of development based on industrialization via import
substitution based on protectionist policies.
During the 1950s, this Latin American model spread to other countries in Asia and Africa and
then the domestic promotion of manufacturing over agricultural and other types of primary
production became a central objective in many development plans.
3. Developmental State Approach:Realizing the failure of neo-liberal development paradigm
(in the 1980’s) in solving economic problems in developing countries, developmental state
development paradigm as an alternative development paradigm. The term developmental state
thus refers to a state that intervenes and guides the direction and pace of economic
development. Some of the core features of developmental state include;
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  Strong interventionism: Intervention here does not imply heavy use of public ownership
enterprise or resources but state’s willingness and ability to use a set of instruments such
as tax credits, subsidies, import controls, export promotion, and targeted and direct
financial and credit policies instruments that belong to the realm of industrial, trade, and
financial policy.
 Existence of bureaucratic apparatus to efficiently and effectively implement the planned
process of development.
 Existence of active participation and response of the private sector to state intervention
 Regime legitimacy built on development results that ensured the benefits of development
are equitably shared and consequently the population is actively engaged in the process
of formulating and executing common national project of development....etc.
3. Core Issues, Governing institutions and Governance of International Political Economy
a. International Trade and the WTO
The World Trade Organization (WTO) is an international organization which sets the rules for
global trade. This organization was set up in 1995 as the successor to the General Agreement on
Trade and Tariffs (GATT) created after the Second World War. It has about 150 members. All
decisions are taken unanimously but the major economic powers such as the US, EU and Japan
have managed to use the WTO to frame rules of trade to advance their own interests. The
developing countries often complain of non-transparent procedures and being pushed around by
big powers.
“How is international/global trade governed?” One most common answer is the idea that
Global/Regional Free Trade Agreements govern it-i.e institutions like World Trade Organization
(WTO) and North American Free Trade Agreement (NAFTA) or similar other organizations.
How does this work? In the case of NAFTA- a trade agreement among the U.S., Canada, and
Mexico- for example, “free trade” was initially meant a lesser degree of governmental
constraints in cross-border trade, but not an elimination of government action.
b. International Investment and the WB
The World Bank was created immediately after the Second World War in 1945. Its activities are
focused on the developing countries. It works for human development (education, health),
agriculture and rural development (irrigation, rural services), environmental protection (pollution
reduction, establishing and enforcing regulations), infrastructure (roads, urban regeneration, and
electricity) and governance (anti-corruption, development of legal institutions). It provides loans
and grants to the member-countries. In this way, it exercises enormous influence on the
economic policies of developing countries. It is often criticized for setting the economic agenda
of the poorer nations, attaching stringent conditions to its loans and forcing free market reforms.
The impact of the WB on the development of developing countries has been at best controversial
and at worst negative. This has largely to do with the ‘one size fits all’ types of excessive and
hard to implement policy prescriptions (mostly of the neo-liberal versions) of the bank to
developing countries and the tough aid/loan conditionality it often puts for policy conformance.
That is also why the bank’s relationship with the governments of the developing countries who
seriously want to defend their policy freedom has often been not smooth. Africa socialism???
c. International Finance and the IMF

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The International Monetary Fund (IMF) is an international organization that oversees those
financial institutions and regulations that act at the international level. The IMF has 184
member countries, but they do not enjoy an equal say. The top ten countries have 55 per cent of
the votes. They are the G-8 members (the US, Japan, Germany, France, the UK, Italy, Canada
and Russia), Saudi Arabia and China. The US alone has 17.4 per cent voting rights.
The global financial system is divided into two separate, but tightly inter-related systems: a
monetary system and a credit system. The international monetary system can be defined as the
relationship between and among national currencies. More concretely, it revolves around the
question of how the exchange rate among different national currencies is determined. The credit
system, on the other hand, refers to the framework of rules, agreements, institutions, and
practices that facilitate the transnational flow of financial capital for the purposes of
investment and trade financing.
4. Exchange Rates and the Exchange-Rate System
An exchange rate is the price of one national currency in terms of another. There are two main
exchange rate systems in the world namely: fixed exchange rate and floating exchange rate. In a
pure floating-rate system, the value of a currency is determined solely by money supply and
money demand i.e Market only. In other words, this system exists only when there is absolutely
no intervention by governments or other actors capable of influencing exchange-rate values
through non-market means. A pure fixed-rate system, on the other hand, is one in which the
value of a particular currency is fixed against the value of another single currency or against a
basket of currencies i.e government intervention
5. Globalization and Regionalism
Globalization is often understood as a phenomena, or a process characterized by increasing
interconnectedness or interdependence. In short, it is a supra regional process bringing the
world into one global village.The economy, politics, and technology have been the driving
forces of globalization. Regionalism, on the other hand, is conceived as a way of dealing with
politico-economic, social, military and security issues affecting states in common.
5.1. Defining Globalization
Globalization can be defined as a multidimensional process characterized by:
 the stretching of social and political activities across state (political) frontiers
 the intensification or the growing magnitude of interconnectedness social existence from
the economic to the ecological, the spread of HIV-AIDS, from the intensification of
world trade to the spread of different weapons;
 the accelerating transport and communication
 The growing extensity, intensity, and velocity of global interaction of local events may
come to have global consequences and global events may come to have serious local
consequences creating a growing collective awareness of the world as shared social
space, i.e. globality or globalism.
 Globalization embodies a process of deterritorialization, For example terrorist and
criminals operate both locally and globally.
 Not only that the distinction between the domestic and international, inside and outside
the state breaks down.

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The Globalization Perspectives/Debates
Globalization is a contentious issue in international relations. There has been intense debate as
to the direction, nature and effect of globalization on states. In this regard, there are three
perspectives: the hyper-globalists, the skeptics, and transformationalists.
The Hyper-globalists
 it is a new epoch in human history that sates obsolete to regulate their economy and
boundary.
 it privileges the economic over the political, the market over the state, and prefigures the
decline of states i.e Economy is means to end.
 de-nationalization/ de-territorialization of economies through the establishment of
transitional networks of production, trade and finance due non-state actors like MNCs.
 modernization replacing the traditional culture having an impetus towards creating a new
global order marked by uniform cultural values or way of life i.e Cultural imperialism
The Skeptics
 The skeptics rejected the view of super- globalist as a myth, flawed and politically naïve
 States are central actors and agents of globalization playing central role in shaping and
regulating the economic activities including the Trans-boundary flows of ideas, goods
and peoples.
 undermine the view that the world is interconnected and moving into a "one village"
 globalization is not more than regionalization because financial and trading blocs
Western countries, North America, in Asia and Africa like NAFTA, ASEAN,EU,
COMESA...
 globalization brings nothing new, rather it is just the crystallization the already
existing realities of the world which has been marked by the North-South gap reflected
in terms of the deeply rooted patterns of in equality and hierarchy.
The Transformationalist
 Central to the transformationalist perspective is the conviction that globalization is a
critical driving force behind the rapid social, political and economic changes which are
reshaping globalization is reconstituting or reengineering the power, function and the
authority of the state, Even though the state has ultimate legal power to control events
inside its boundary, it can’t command sole control over trans-boundary issues, actors,
resource movement societies and international politics.
 globalization is reconstituting or reengineering the power, function and the authority of
the state,
 it argues new sovereignty regime is displacing traditional conception of state power as
an absolute, indivisible, territorially exclusive power,
 State-Centric or even primarily state managed as authority has become increasingly
diffused amongst public and private a agencies at the local, national, regional and at
global levels.

Globalization and Its Impacts on Africa

The world becomes one, and interactions among diverse people begin to look like those within a
village. Thus terms such as “One World” and “Villagization” are sometimes used as synonyms
for globalization.

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The cold war has had significant consequences for Africa. During its height in the 1960’s and
1970’s, the cold war witnessed the emergence of authoritarian regimes in most African
Countries in the form of one-party or military regimes. This was largely a result of the support
of the two blocks to keep African countries in their respective camps. In any event, both one
party and military regimes inhibited the emergence of democratic governance and
developmentally oriented regimes in Africa. With the end of the cold war, support has been
withdrawn by the major powers for many African countries considered no longer of strategic
importance. This has entailed an increase in the number of so called “failed states” in Africa
during the last two decades. This development has also been inimical to the emergence and
consolidation of effective Democratic and developmentally oriented regimes in Africa.
In addition, the end of the cold war has witnessed an over-all decline in the strategic importance
of Africa. This has, in turn, substantially reduced Africa’s international negotiating power and its
ability to maneuver in the international system with a view to gaining a modicum of freedom of
choice, autonomy and leverage in its dealings with more powerful actors. In sum then, the cold
war and its demise has worked against democracy and economic development in Africa. The
problem therefore lies in Africa’s position in the global system and not in the specific form taken
by globalization.
Positive impacts of globalization on Africa:-
 erosion of sovereignty, especially on economic and financial matters, as a result of the
imposition of models, strategies and policies of development on African countries by the
International Monetary Fund, the World Bank and the World Trade Organization.
 globalization has promoted greater respect for human rights and contributed to the
development of an African press
 has opened African countries to far greater scrutiny than in the past,
 that it has made available information on how other countries are governed and the
freedoms and rights their people enjoy.
 the reduction of the capacity of governments to determine and control events in their
countries, and thus their accountability and responsiveness to their people, given the fact
that the context, institutions and processes by which these decisions are taken are far
from democratic.
 It has also opened African countries to intense external scrutiny and exercised pressure
for greater transparency, openness and accountability in Africa.
Negative impacts of globalization on Africa:-
 globalization has often pressured African leaders to adopt policies and measures that has
led to the rise or reinforcement of authoritarian regimes.
 basic and generally accepted principles of democratic governance that local/ fundamental
principles of democracy is thus undermined, cynicism arises, and the effort itself fails to
develop roots in the countries to which they are being artificially transplanted.
 Globalization leads to the development of anti-developmentalism by declaring the state
irrelevant or marginal to the developmental effort. Development strategies and policies
that focus on stabilization and privatization, rather than growth, development and poverty
eradication, are pushed by external donors, leading to greater poverty and inequality and

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 undermining the ability of the people to participate effectively in the political and social
processes in their countries
 By imposing economic specialization based on the needs and interests of external forces
and transforming the economies of African countries into a series of enclave economies
linked to the outside
 the economic specialization imposed on African countries makes rapid and sustainable
growth and development impossible, conflicts over the distribution of the limited gains
realized from globalization become more acute and politicized.
 globalization, by insisting on African countries opening their economies to foreign goods
and entrepreneurs, limits the ability of African governments to take proactive and
conscious measures to facilitate the emergence of an indigenous entrepreneurial class.
 Economically, globalization has, on the whole, reinforced the economic marginalization
of African economies and their dependence on a few primary goods for which demand
and prices are externally determined.
Ethiopia in a Globalized World
Ethiopia is one of the countries marginally integrated to the capitalist system during the post-
Cold War era. Despite the 17 years interruption during the Derg period, Ethiopia continued to be
marginally integrated to the post-Cold War global capital. This has multiple implications to the
way globalization influenced the country.
Yet, Ethiopia like any other country found itself facing a fast track of multidimensional changes
that positively and negatively affected its place in the globe. For instance, the triumph of western
free market economy and liberal democracy has put the country’s defiant political economic
policy in a head-on collision course with the requirements of Bretton woods institutions and
western powers. This indeed has its mark on the development aid and loan Ethiopia managed to
secure to finance its national development projects and design its own economic policy
independently. Nevertheless, with meticulous planning and strategic thinking, Ethiopia achieved
amazing economic transformation and gained a lot from the positive opportunities of
globalization. It has also benefited from the technological and knowledge transfer, free
movement of ideas, people and finance. The other side of the globalization coin shows
negative impacts on Ethiopia. Among others, the expansion of information communication
opened the historically closed doors of Ethiopia to new religious and secular values that affected
the religiosity and social solidarity of its people. This is reflected in the rise of religious
radicalism of every sort and posture. Socio-cultural impact of western values is amply observed
in urban centres. Furthermore, the globalization dynamics contributed to the rise radical
nationalism and ethnicity??. The prevalence of human trafficking and migration is partly
attributable to the onset of globalization. To sum up, Ethiopia has benefited less from
globalization?? than its negative influences.

Pros and Cons of Globalization/ Merits and demerits.

Among the leading merits of globalization are:-
 expansion of democratic culture, human right and the protection of historically minority
and subaltern groups.

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  Innovation in science, medicine, and technology and information communication has
enabled the improvement of quality of life.
 free movement of good, service, people, ideas, expertise, knowledge and technology
across national borders strengthened international interdependence
 contributed to the birth of a new sense of global society and the perspective of global
citizenship that contradicts the classical idea of citizenship limited national borders and
defined by nationalism and patriotism.
Demerits globalization:-
 risks, threats and vulnerabilities like global terrorism, religious fundamentalism,
proliferation of Small Arms and Light Weapons (SALWs), arms and human trafficking.
 contributed to the rise of radical nationalism and ethnicity, etc
5.2. Defining Regionalism and Regional Integration
Region can be defined as a limited number of states linked together by a geographical
relationship and by a degree of mutual interdependence (Nye, 1968). Regionalism
consequently refers to intensifying political and/or economic processes of cooperation among
states and other actors in particular geographic regions.
Regionalism normally presents the sustained cooperation (either formal or informal) among
governments, non-governmental organizations, or the private sectors in three or more countries
for mutual gains.
Regionalization can be conceived as the growth of societal integration within a given region,
including the undirected processes of social and economic interaction among the units (such as
nation-states; see Hurrell 1995a).
regionalism refers to the proneness of the governments and peoples of two or more states to
establish voluntary associations and to pool together resources (material and nonmaterial) in
order to create common functional and institutional arrangements. Furthermore, regionalism
can be best described as a process occurring in a given geographical region by which different
types of actors (states, regional institutions, societal organizations and other non-state actors)
come to share certain fundamental values and norms. These actors also participate in a growing
network of economic, cultural, scientific, diplomatic, political, and military interactions (Mace
and Therien, 1996).
Today, the occurrences of regionalism have mushroomed across all parts of the world.
Regionalism
The term \regionalism," according to its suffix `ism' (from the Greek: ismos), refers to the
theoretical dimension of the development process of a region. In the international relations field,
regionalism alludes to any form of institutional cooperation between two or more countries; yet,
regionalism is understood as a political construction conducted by states and materialized by
agreement in order to organize inter-country relationships and promote multifaceted cooperation
between nations.
Regionalization
The term \regionalization," according to its suffix `tion' (from the Latin: tio), refers to some
action or the result of this action. Thus, it denotes the process and dynamic of regional

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integration or even the development process of a region. However, Other defines the term as a
concentration of economic flows within a given geographic area.
Regional integration
Because of generalizations made by the World Trade Organization (WTO), since 1980, the term
regionalism has gradually replaced that of regional integration in reference to any form of
institutional arrangement that aims to liberalize and/or facilitate trade at any level other than
multilateral. Meanwhile, defines economic regional integration as a combination of regionalism
and regionalization. That is, an area is said to be regionally integrated only if it reports both a
concentration of trade flows and institutional coordination, which permanently establishes
common rules, between the concerned nations.
The Old Regionalism
For many scholars, regionalism, as a voluntary and comprehensive process, is predominantly a
post-World War II phenomenon. It emerged in Western Europe in the late-1940s, subsequently
spreading to the developing world. Old regionalism lost much of its dynamism in Europe in the
early 1970s and gradually, also in the developing world. As will become evident below, it is
relevant to try separating the European-centered debate from the debate in the developing world.
Old regionalism was, according to Hettne:
 a reflection of the bipolar system
 the result of the struggle for power among the superpowers who surrounded themselves
with client states
 inward-oriented with protectionist tendencies
 state-centered, in the sense that other actors, such as organizations and economic actors
were not considered important.
New Regionalism
The prospects of the fall of the Berlin Wall together with the 1985 White Paper on the internal
market and the Single European Act resulted in a new dynamic process of European integration.
This was also the start of what has often been referred to as ‘new regionalism’ on a global scale.
The new regionalism referred to a number of new trends and developments, such as the
spectacular increase in the number of regional trade agreements, an externally oriented and less
protectionist type of regionalism, an anti-hegemonic type of regionalism which emerged from
within the regions themselves instead of being controlled by the superpowers, the rise of a more
multi-dimensional and pluralistic type of regionalism, which was not primarily centered around
trading schemes or security cooperation and with a more varied institutional design, and the
increasing importance of a range of business and civil society actors in regionalization.
The new regionalism is characterized by the fact that it:
 is developing within a multi-polar system
 is a process emerging spontaneously or from within the region
 includes non-economic dimensions and thus results in a stronger regional identity a so
called extended nationalism
 is less inward looking since the world economy is now so interdependent

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  promotes more than inter-state cooperation. New regionalism is helping to transform the
global system. Today we are only able to discern the tendencies of this transformation,
which is most visible in the European region
The Difference Between Old and New Regionalism
Old Regionalism New Regionalism
World Order World order context Bipolar world Cold War
Context
Links between Taming nationalism (in Resisting, taming or advancing
National, Regional, Europe) or Advancing economic globalization
and Global modes nationalism (in South)
of governance
Sectors, Actors & Sector specific State-centric Multi-sectoral State vs. non-state actors
Forms of Formal regionalism Hard Regionalism vs. regionalization Formal
Organization regionalism vs. informal Hard vs. soft
Ontology Regional integration Ontological pluralism, confusion and
Regional organizations (& disagreement Regionalism
subsystems) Clear regional Regionalization Regional organizations
boundary lines
Epistemology Dominance of positivism & Rationalism vs. constructivism vs.
rationalism & materialism critical theory Materialism vs.
(and some structuralism in ideas/identities Epistemological
the South) conflict
Methodology Europe-focused Rigid Regional specialization (parochialism)
comparison vs. false universalism (Eurocentrism)
Comparison as parallel case studies or
quantitative studies Little dialogue
between EU studies and IR/IPE
regionalism

Major Theories of Regional Integrations

Functionalism
Functionalist viewed regionalism as a functional response by states to the problems that derived
from regional interdependence. It was seen as the most effective means of solving common
problems. Regionalism has started from technical and non-controversial issues and has spilled
over into the realm of high politics and redefinition of group identity around the regional unit
(Hurrell 1995). According to functionalism, the task of policy makers is to encourage the states
to peacefully work together. The like-minded states would spread the web of international
activities and agencies in which and through which the interests and life of all states would be
gradually integrated from one activity to others (Mitrany 1946).
Neo-functionalism

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Neo-functionalism included clear departures from transactionalism, federalism and
functionalism, which made it clearly a distinct and independent theoretical entity. First, the
clearest difference existed between neo-functionalism and transactionalism. Transactionalism
had defined integration as a condition, and the attainment of integration was measured by the
existence of a 'security-community'. Neo-functionalists, on the contrary, defined integration as
a process:
'Political integration is the process whereby political actors in several distinct national settings
are persuaded to shift their loyalties, expectations and political activities towards a new centre,
whose institutions possess or demand jurisdiction over the pre-existing national states. The end
result of the process of political integration is a new political community, superimposed over
the pre-existing ones.'(Haas 1968, 16).
According to Lindenberg, the following preconditions for the success of an integration process.
These conditions included according to him:
 Central institutions and central policies should be established and developed, because
only they can assure that someone represents and promotes the 'regional view' as well as
solves disputes between member states;
 Their tasks and capacity to implement those tasks should go well beyond the mandate of
normal international institutions;
 Their tasks should be inherently expansive;
 There should be some link between the interests of member states and the process of
integration. (Lindberg 1963, 7-13).
Inter-governmentalism
Inter-govemenmetalism or liberal intergovernmentalism is a theory and approach that focus on
the state for integration to succeed. It approaches the question of the state in an integration
process from the perspective of traditional international relations. It thus considers the state
mainly as an actor in the international system and the integration process to be a process in that
system. According to Moravcsik integration can be considered as part of the rational choice of
state actors. This rationalist framework disaggregates the process of integration into three stages:
national preference formation, interstate bargaining and institutional choice. In the first
stage, the degree of integration depends on the interests of influential domestic constituents
exercising pressure over their governments.
Supra-nationalism
Haas first sees integration as a process led by elitist groups, like leaders of industry associations
or political parties, who recognize a lack of opportunities in pursuing a shared interest at the
domestic level and then push national governments to transfer policy competence to a
supranational body. Then, once supranational institutions are created, international
interdependence grows, and interest groups or political party leaders can shift their loyalties
away from national institutions by choosing to pursue their interests through newly established
international institutions.
Regionalization versus Globalization and State

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The way regionalization, globalization and the state interact have various forms based on the
issues under consideration. For instance, the nature of interaction among the three on issues of
economics and security greatly differ. Therefore, it is vital to differentiate the issues before
addressing the nature of interaction. For instance, when trying to assess the complex relationship
between regionalization and globalization, one might conclude that the trend toward economic
regionalism is perhaps more mixed than the trend toward security regionalism: In the
international economy, globalization and regionalization appear to be pushing states in different
directions, but there is today no major impetus toward globalization in the security arena,
perhaps with the exception of nuclear issues such as nonproliferation (Lake 1997). Hence, the
regionalization of security is not a universal trend like the formation of economic regions.
The Relations between Regionalization and Globalization
There are three possible options regarding the mutual relations between regionalization and
globalization, especially in the economic dimension:
 regionalization as a component of globalization (convergent trends);
 regionalization as a challenge or response to globalization (divergent trends);
 regionalization and globalization as parallel processes (overlapping trends) (Mittelman
1996a).

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