Geography Reference
In-Depth Information
All of these institutional developments promote trade and multinational
investment because they allow, at least to some extent, goods, services,
capital and labour to move more freely between countries. Today the
three largest areas of closely integrated activity - though varying greatly
in terms of degree of economic integration achieved - are the three 'super-
regions' of the EU, NAFTA and the East Asia region dominated by
China, Japan, Korea and Taiwan. The major outcome of such changes has
been the increasing importance of these super-regions within the global
economic system (Rugman and Verbeke, 2004b, 2007, 2008a, b). As we
saw in Chapter 1, by 2005 these three economic super-powers had roughly
comparable size economies: the gross income of NAFTA represented 32.6
per cent of global income, the EU 29.4 per cent, and South and East Asia
22.3 per cent; and together, the three regional blocks accounted for 84.3
per cent of global income, and 73 per cent of global trade (World Bank
2007).
Thus, globalization is largely dominated by the advanced countries,
and particularly by the three regional blocks, to the point that, as we
also noticed in the case of technological and innovative activities in
Chapter 4, that many scholars now prefer to use the term 'triadization',
instead of globalization, of the world economy. The spatial aspects of
these trends have become even more complex and geographical proxim-
ity has become increasingly important for trade and FDI (UNCTAD
2000, 2007). Both the trade levels and FDI stocks between the US and
Canada, and between the EU nations are much greater than what would
be predicted simply on the basis of the scale of these economies (Krugman
2007), as is also true in the case of Japan and the other East Asian econo-
mies (UNCTAD 2007). The reason is that international exchanges and
investments are highly associated with geographical proximity between
adjacent or neighbouring countries. These groups of mutually very open
neighbouring countries are here referred to as the broad macro-regions
or super-regions, and this tendency for groups of countries located in the
same parts of the world to develop stronger interrelations is increasing.
The geographical patterns of, principally, double taxation treaties (DTTs)
and, secondarily, bilateral investment treaties (BITs), closely resembles the
cross-border patterns of FDI (UNCTAD 2003). The most striking case of
this is again that of the EU. In terms of bilateral inward investment stocks,
in 1995 17 of the top 50 pairs of countries were from Europe, whereas by
2005 this number had increased to 22 (UNCTAD 2007). This reflects the
rapid increase in both EU economic integration and its enlargement to
Central and Eastern Europe over recent years.
The development of regional institutions of economic regulation, policy
coordination and political-economic integration, are also intrinsically
Search WWH ::




Custom Search