Globalization and the competitiveness of regional blocks in comparative perspective

Given the uncertain outcome for regional trade arrangements and given the need for improved international competitiveness due to ongoing globalization it seems advisable to promote at a national level those policies which might help to enhance both integration into the regional and world markets. Prominent candidates for such policies are the build-up of infrastructure at the national and regional level and human capital formation (Fischer, Gleich, Grabendorff 1994). According to estimates by the World Bank (1994) about 60 billion US$ would have to be invested in infrastructure up to the year 2000 to enable Latin America the successful continuation of its exports led growth strategy. Presumably the greatest competition between nations, in terms of bidding for a larger share of mobile resources, occurs in the context for the managerial and technological skills of successful multinational enterprises, including the competition for the talent of highly skilled professionals - academic researchers, engineers and other professionals (Hufbauer, Stephenson 1995 and Garelli 1996). Therefore human capital development should be a priority on the policy agenda. Finally, the enforcement of institutional competition could be a deliberate strategy in improving the competitiveness of economies (North 1995). Institutions are the constraints that human beings impose on human interaction including formal rules, informal constraints and enforcement characteristics. Given the importance of FDI as a driving force of both regional and global integration there is an urgent need to ensure a fair international competitive environment, in particular with regard to foreign direct investment. Investment issues are currently the subject of discussion or negotiation in a number of regional fora. One important initiative was the launching, in May 1995, of negotiations aimed at the conclusion of a Multilateral Agreement on Investment among the Members of the OECD. The main aim of these negotiations is to eliminate discrimination between foreign and domestic investors. The agreement is intended to provide a broad framework for international investment, with high standards for the liberalization of investment regimes and the protection of investment, and with effective dispute management ...