Leveraging Regional Integration in Foreign Economic Policy: the Case of Small and Open Economies

Abstract

The global economic landscape has undergone dynamic transformations, leading to an interconnected and interdependent system. This evolution has prompted governments, particularly those of small and open economies, to adopt innovative instruments to bolster their competitiveness. The article explores the growing trend of utilizing participation in regional integration as a strategic tool in active foreign trade policy analysing the specific challenges and opportunities for small and open economies. For them, integration might serve as a multifaceted foreign trade policy instrument, offering avenues to reduce vulnerability to external shocks, enhance competitiveness, preserve added value, and strengthen regional resilience. This proactive approach reflects an acknowledgment that participation in integration processes is a strategic means of advancing their interests and safeguarding their economies in an increasingly interconnected world. The proposed three-dimensional evaluation framework offers a nuanced analysis of integration processes, considering factors such as genesis, motivation, and development. This comprehensive approach provides valuable insights for policymakers, scholars, and analysts navigating the complexities of the contemporary international economic order.