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Promoting Domestic Reforms Through Regionalism

  • Philippa Dee


    (The Australian National University (ANU) - Crawford School of Public Policy)

There is a strong presumption among economists that domestic reforms are promoted by regionalism. Yet strong empirical evidence for this proposition is lacking. The purpose of the paper is to examine in some detail both the theoretical arguments and empirical evidence on this issue, drawing on the relevant economic, political and legal literatures. The paper argues that in general, the case for reciprocity in domestic reforms is weak. In the one case where a regional agreement appears to have promoted domestic reform — the European Union — the enforcement mechanisms used by the European Court of Justice played a significant role. But those mechanisms are not unique. Instead, the paper argues that the EU's success was because domestic constituents were empowered to take action against uncompetitive regulation. Thus the EU promoted economic reform in sensitive, behind-the-border areas because it overcame the problem of loss of sovereignty by internalising the political battle to domestic interests, and yet still provided a non-political frame of reference for the debate.

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Paper provided by Crawford School of Public Policy, The Australian National University in its series Crawford School Research Papers with number 1107.

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Length: 35 pages
Date of creation: Aug 2011
Date of revision:
Handle: RePEc:een:crwfrp:1107
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  1. Francois, Joseph & Hoekman, Bernard, 2009. "Services Trade and Policy," CEPR Discussion Papers 7616, C.E.P.R. Discussion Papers.
  2. Martin Gassebner & Noel Gaston & Michael J. Lamla, 2011. "The Inverse Domino Effect: Are Economic Reforms Contagious?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(1), pages 183-200, 02.
  3. Blanchard Emily J, 2007. "Foreign Direct Investment, Endogenous Tariffs, and Preferential Trade Agreements," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 7(1), pages 1-52, November.
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  6. Burley, Anne-Marie & Mattli, Walter, 1993. "Europe Before the Court: A Political Theory of Legal Integration," International Organization, Cambridge University Press, vol. 47(01), pages 41-76, December.
  7. Hoekman, Bernard & Mattoo, Aaditya, 2011. "Services Trade Liberalization and Regulatory Reform: Re-invigorating International Cooperation," CEPR Discussion Papers 8181, C.E.P.R. Discussion Papers.
  8. Barichello, Richard R., 2004. "Nafta And Domestic Agricultural Policy Reform: Observations From Canada," Working Papers 15851, University of British Columbia, Food and Resource Economics.
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  11. Bernard Hoekman & Aaditya Mattoo & André Sapir, 2007. "The political economy of services trade liberalization: a case for international regulatory cooperation?," Oxford Review of Economic Policy, Oxford University Press, vol. 23(3), pages 367-391, Autumn.
  12. James R. Barth & Gerard Caprio, Jr. & Ross Levine, 2002. "Bank Regulation and Supervision: What Works Best?," NBER Working Papers 9323, National Bureau of Economic Research, Inc.
  13. Jean-Yves Pitarakis & George Tridimas, 2003. "Joint Dynamics of Legal and Economic Integration in the European Union," European Journal of Law and Economics, Springer, vol. 16(3), pages 357-368, November.
  14. Carrubba, Clifford J. & Murrah, Lacey, 2005. "Legal Integration and Use of the Preliminary Ruling Process in the European Union," International Organization, Cambridge University Press, vol. 59(02), pages 399-418, April.
  15. Philippa Dee, 2005. "The Australia-US Free Trade Agreement: An Assessment," Asia Pacific Economic Papers 345, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
  16. Edward M. Graham & Erika Wada, 2000. "Domestic Reform, Trade and Investment Liberalisation, Financial Crisis, and Foreign Direct Investment into Mexico," The World Economy, Wiley Blackwell, vol. 23(6), pages 777-797, 06.
  17. Harms, Philipp & Mattoo, Aaditya & Schuknecht, Ludger, 2003. "Explaining liberalization commitments in financial services trade," Policy Research Working Paper Series 2999, The World Bank.
  18. Claude Barfield, 2001. "Free Trade, Sovereignty, Democracy," Books, American Enterprise Institute, number 52877, September.
  19. Wilfred J. Ethier, 1998. "Regionalism in a Multilateral World," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1214-1245, December.
  20. Park, Innwon & Park, Soonchan, 2006. "Reform-creating regional trade agreements and foreign direct investment: applications for East Asia," MPRA Paper 1817, University Library of Munich, Germany, revised Jan 2007.
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  22. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June.
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