Imperatives in the Study of Integration Tendency

The basis of the cooperation of national economies into the global economy is the international labor division. It is a specialization of individual countries in the production of certain products. It is known by history that the surplus of manufactured products was the first exchange of neighboring tribes, some families and individuals, and then the states (“International Aspects of Economic Theory”, n.d). All this happened at the level of economic syncretization, i.e. complementarity.

These were the first attempts at rapprochement of the peoples associated with different environmental factors that determined the direction of economic development. But the nature of the interaction of the integration in the modern sense began only in the period of capitalism when the previously established bilateral and trilateral trade relations are beginning to grow into a worldwide communication.

As the entire course of human history, the process of integration was accompanied by significant progress in the economy, science and culture. However, the inequality of social, economic and political development have generated a sense of superiority of one people over the rest of the system and caused the desire to impose their way of life, even – to assert its dominance. On the basis of this there was arisen an imperialism.

From an economic point of view, empire is a specific tool for redistributing surplus product between nations in favor of a strong state and pumping of the conquered countries of raw materials, which allowed metropolises develop rapidly. Created by force these empires have existed for quite some time, but the economic and cultural fragmentation of different nations, the growth of national consciousness eventually led to the decay of these artificial structures. In this respect, here is an example as the fate of the Roman, Byzantine, Ottoman, British, French, Dutch, Austro-Hungarian, German, Russian Empire and then the Soviet Union (Kasabaev, 1998). With the emergence of a large number of new states with different levels of development and economic identities, there had appeared such conditions that the time required to find adequate integration links. There was also the need to examine the theoretical basis of this

phenomenon. Experts note that a unified theory of integration did not appear immediately (Machlup, 1977).

Firstly the term “integration” was used in the 1930s. However, the theory of integration has never been the conceptual basis of specific policy decisions. Creators of integration guided common interests of their countries and the world community. The scientific study of the problems of integration associated with the comprehension of the actual processes of cooperation – from the attempt to create the League of Nations and to the current efforts of the UN, and purports to identify common features of interaction between countries and peoples (Druzhilovsky, 2001).

Attempts of theoretical understanding of regional integration have been made later – in the 1950s. By the scientists working in line with the neo-liberal direction, integration is understood to create a single geo-economic space, which includes several countries. To achieve these goals it had to be completely free of foreign trade and the monetary sphere of state control. By the representatives of this direction, integration problems were seen in the plane of the integrable association markets through liberalization of foreign trade (Darity, 2008). The resulting theory of integration came from economic prerequisites. Special attention was paid to the flow of goods between member states, which improves the efficiency of production, prosperity, increase the competitiveness of goods produced within the integrated union. This categorical definition later developed into a theory of free trade. At the heart of this concept there is the principle of benefits of the specialization of production and exchange of goods on the basis of the international division of labor. Another aspect of the theory is based on the integration of non-economic factors such as the union of economies that reducing the risk of armed conflict between the member countries and increasing the overall defense. Finally, the third area came from the fact that countries seeking integration due to the limited internal factors of production, i.e. to overcome the “limiting factor”. Overcome the

“limiting factor” leads to economies of scale, the development of new technologies, increase the assortment of goods, improvement of quality, development efficiency, increased investment in research and development, which ultimately makes it more attractive integrated system as a whole (Sen, 2005).

Every country has a certain amount of natural resources, development of national economy, historically accumulated intellectual scientific potential. The first argument in favor of the technology transfer of business between the two countries in these circumstances is differences in production conditions, i.e. the presence or absence of production conditions are necessary for development of modern industry. The second argument in favor of cooperation between different countries will be presence of the production costs. The cost of production varies across countries. For example, the cost per unit of power of car in Japan is lower than the automobile industry in USA, or the South Korean and Taiwanese electronics are cheaper than the Japanese because of cheap labor. Most often it is cheaper to import than to produce at home. David Ricardo (1817) substantiated this principle in the theory of comparative advantage, and proved that the specialization will benefit both countries. He argues that Scotland incurs accessing cost in producing grape wine at home, like wise Portugal producing oats.

Thus for two countries to benefit, Scotland should specialize in producing oats while Portugal specializes in producing wine. Scotland then exports oats to Portugal and imports wine from Portugal. Therefore, he believed that the specialization leads to the accumulation of capital and thus to economic growth and increased demand for labor for countries (Suranovic, 2004).Thus, the theory of comparative advantage is based on differences in cost among countries due to labor producing differences. The Heckscher-Ohlin Model of trade also postulates that differences in resources endowments among countries causes differences in prices, and thus becomes basis for trade.

The practical necessity of the integration between countries was a subject of investigation in 1950s and 1960s by a number of other scholars, such as J. Rueff, R.

Schumann, W. Hallstein, M. Panich, E. Benoit, Jean Monnet, P. Robson, etc. One result of these investigations suggests that the formation of Customs Unions lead to the elimination of trade barriers. Effect of integration in this case involves the creation of new trade flows due to expanding markets, increasing production, and hence the growth of wealth and the level of specialization in the involved countries.

In modern times, the development of industry, the increasing scale of production and the increasing intra-industry specialization are not quite possible without integration.

Supporters of such categorical imperative as neoliberalism view integration as a consisting of a market space across a number of countries where there are natural

economic forces, regardless of the policies and legislation (Dunne, Kurki, Smith, 2010).

Followers of corporationalism believed that integration would result in the emergence of multinational corporations, whose functioning promotes rational and balanced development of economic ties (Muratovski, 2008). Structuralism suggests that the economic integration leads to a process of structural change in economies with large companies and entire industries. The result of these changes, in their opinion, is an entirely new integrated space with more advanced economic mechanism (Arndt, 1985).

Neo-Keynesians believed that the benefits of integration, while preserving at the same time the maximum degree of freedom for each country, is necessary the harmonization of domestic and foreign policy of the integrating parties in order to achieve an optimal combination of the two options of integration:

– the union of states with subsequent loss of sovereignty and mutual coordination of economic policies;