Economía del Caribe

ISSN electronico 2145-9363
ISSN impreso 2011-2106
n°.6, Julio - Diciembre de 2010
Fecha de recepción: octubre de 2009
Fecha de aceptación: noviembre de 2009

Regional institutions in global "south": the rationale of regional institutionalization in South America since the 21st century

Las instituciones regionales en el sur del globo: la logica de las instituciones regionales en america del sur desde el siglo xxi

Taeheok Lee B

Ph.D. Candidate, GeorgeWashington University (USA). Adjunct professor (lecturer). Department of Political Science, University of Ulsan, South Korea.


En los ultimos anos, el "paisaje o territorio politico" ha sido tan notablemente modificado y cambiado que se puede rechazar la idea de "final de la historia" en America del Sur, particularmente a partir del siglo XXI. Diversos investigadores como Bjorn Hettne, Osvaldo Sunkel y Philippe De Lombaerde, y tambien organizaciones inter-nacionales como la Comision Economica para America Latina y el Caribe de Naciones Unidas (CEPAL) han prestado atencion a los distintos gobiernos de izquierda que, eventualmente, han gobernado en estos paises.

En este sentido, este estudio trata de comprender la logica del "nuevo" regionalismo bajo la globalizacion y en particular para contribuir a los avances academicos en esta area. Este estudio pretende sobre todo aproximarse a la formacion de una base teorica para comprender y aplicar los fundamentos de las instituciones regionales que tienen mas orientacion politica. De esta forma, se analizan no solo los diversos aportes teoricos sobre la integracion en America del Sur, sino tam-bien algunas de las principales variables claves de su evolucion, en las cuales se posiciona la variable "identidad" como un tema fundamental.

Palabras clave : Regionalismo, globalizacion, identidad, institu-ciones regionales, America del Sur.


Particularly, beginning the 21st century the Political landscape saliently changed and shifted to debunk the notion of "the end of history" in South America. Several Latin American scholars including Bjorn Hettne, Osvaldo Sunkel, and Philippe De Lombaerde and the international organizations including United Nations for Latin American Economic Commission (UN ECLAC) have paid attention to the left-leaning governments which have eventually governed these states.

In this vein, this study (as an initial step for the research proposal) attempts to understand the logic of (new) regionalism under globalism and particularly to contribute to its academic value. This study is mainly approaching the subject from a theoretical foundation in order to understand and then to apply the rationale of politically-oriented regional institutions.

Keywords : Regionalism, globalization, identity, regional institutions, South America.


"What makes Less Developed Countries (LDC), particularly in South America, cooperate and/or operationalize regionally based institutions?" How can this current tendency be explained and be understood in the globalization1 period?

This study addresses these questions through examining regionally formed and forming institutions including Bolivarian Alternative for the Americas (ALBA), and The Union of South American Nations (UNASUR) within Latin America, in particular South America.

ALBA is based on the authentic development interests of the region, with principles of co-operativism, cooperation, solidarity and respect for the sovereignty of nations. It is a concept of integration that cannot be reduced exclusively to economic dynamics. Rather, it treats the social dimension as a substantial part of integration and addresses itself to the most pressing development problems of the region (Dello Buono & Bell Lara, 2007, p. 9). Therefore, I believe that ALBA represents a regional integration initiative which has a connotation of solidarity and cooperation rather than trade and profits.2 Yet, ALBA does not deny the importance of trade and profits per se.

The Union of South American Nations, which is comprised of twelve nations including Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay, and Venezuela, is a supranational and is an "intergovernmental union integrating two existing trade unions: Mercosur3 and the Andean Community of Nations (CAN)4, as part of a continuing process of South American integration. It is modeled after the European Union.”5

In these dynamic regional integration movements, the remainder of this research proposal is outlined in the following manner. First, I discuss the research objectives while reviewing and assessing the relevant literature. I then provide theoretical debate among (neo) functionalism, intergovernmentalism, and neoliberal institutionalism under the umbrella of first wave theorizing, and social constructivism to better understand and explain regionalism as a political concept. While theoretical debate is discussed, I will state the dependent variable, independent variable and testable hypothesis.The following section will discuss the regional empirical cases of South American institutions. This paper will conclude with contributions of the approach and the limitations to the argument.

Research Objectives and (Theoretical) Literature Review

This study first aims to fill the gaps in the literature of regionalism. In other words, the studies regarding regionalism is mainly focused on the European Union (Finn, 2003, p. 2), and to a lesser extent to Asian regionalism. Furthermore, the most salient driving factors for nations to develop regionalist tendencies is a matter of economics and/or security. While these independent variables can also apply to the current South American regional institutions including MERCOSUR, I argue that these prima facie elements are not sufficient in explaining the somewhat radical regional institutionalization including ALBA, and UNASUR.

Although there is some literature which offers detailed information of these key events, this pre-existing body of literature does not pay great attention to theoretical and systematic (analytical) explanations of the relationship. To my knowledge, few scholars conduct the research for these two particular regional integration initiatives taking them into seriously account. I believe that Dr. Paul Kellogg (2007) in particular has discussed these newly formed regional integrations. However, he did not take this current regional movement in the light of regional theoretical approach; rather he has dealt with the mere description and comparison of the ALBA and UNASUR cases.

In this logic, given that Amitav Acharaya and Alastair Iain Johnston (2007, p. 2) acknowledged in Crating Cooperation: Regional International in Comparative Perspective, that there is a sense that we need to solve the puzzle: "how to describe and then explain any variation in the design of regional security and economic institutions across Asia, Africa, Latin America, the Middle East, and Europe".

In some sense, Shaun Breslin, ChistopherW. Hughes, Nicola Phillips and Ben Rosamond (2002) have already posed similar question and approached this puzzle by means of introducing the new regional paradigm, called 'second (new)-wave' theorizing of regionalism. I believe that their intellectual contribution in theorizing the variation of regional institutions is vital and is also precise corresponding from the contemporary scholastic demand. In this respect, this study, which attempts to find the relevant explanations for the current regional dynamics in South America, will begin with assessing the theoretical framework. Before forming the theoretical framework, which consists of first wave theorizing for regionalism and second wave theorizing, this study briefly introduces the academic debate with respect to the 'definition' of regionalism.

Definition of Regionalism

Edward Mansfield and Helen Milner (2007) acknowledge that defining regionalism among scholars remains a dispute.Within this somewhat disputable context, they define regionalism as "an outgrowth of government policies intended to increase the flow of economic or political activity among a group of states in close geographic proximity" (Mandfield & Milner, 1997, p. 3). This statement acknowledges the value and role that "natural forces" and "government policies" play in the discussion of regionalism.

The other school of thought includes Benjamin Cohen (p. 50) and Charles Kupchan (p. 209), who have a different way of understanding regionalism, adopting a non-geographical definition of regionalism. The former emphasizes the member's currency, thus constituting the value of the "currency" in a region, whereas the latter adopts a social constructivist approach and advocates that a shared sense of communal identity can apply without being located near each other. Also, Edward Mansfield and Rachel Bronson view the effects of preferential trading arrangements (PTAs) on trade flows such as the US — Israeli Free Trade Area as being considered in the field of non-geographical definition of regionalism (p. 188). Non-geographical factors also include sharing a common culture, languages, religions, and ethnic backgrounds.

Thus, geographical and non-geographical definitions of regionalism should be incorporated into a broader definition in order to better incorporate a broader set of positions. In this set of definitions, IR scholars propose several different variables that they present for solving the equation of regionalism-related inquiry (p. 188), such as: "Why is regionalism salient at this period of time rather than before?; Why are these nations trying to form as regional groups whereas other nations are not?;" and "^Why is this regional institution more developed than that of other regions?"

theoretical Framework for Regionalism

1. FirstWave theorizing

To solve these above-mentioned questions, scholars employ their theoretical lens to understand and explain these political activities and platforms. Before analyzing different approaches with respect to regionalism, it is relevant to consider who was the pioneer in this subject. Adler and Barnett (1988) began with their contribution, stating "[their] volume thinks the unthinkable" (p. 3) in planning to discuss Karl Deutsch's security community. This is a concept, which IR scholars; particularly (neo) realists are uncomfortable thinking about as it poses the possibility of (peaceful and cooperative) community, given the anarchical perception (world).6

However, this is an opening point in which political scientists could consider the ways of thinking about the feasibility of international (peaceful) society and regional institutions. In this sense, there are two dichotomous realms within which the IR theories can fit.

One is the international explanation of regionalism and the other is the domestic explanation of regionalism. In the international explanations of regionalism, functionalism and neofunctionalism have one approach for explaining regionalism. Mitrany, Ernst Haas, and Walter Mattli understand that exponents of functional and neofunctional approaches conjecture that governments tend to forge international institutions in order to meet various functional needs. They see the fundamental aspect of the functional method as a role in which "sovereignty cannot.. .be transferred effectively through a formula— i.e., signing pacts in chancelleries —only through a function" (Mattli, 1999, p. 2).

In short, they believe that functional cooperation among nation-states does not evolve from the political factors but rather from the economic circumstances including joint management of scarce resources, unemployment, and public health. They argue that the expansion of economic activity creates incentives for states to further liberalize and standardize economic exchange, leading to enhanced economic welfare of participants. Therefore, through gradual functional developments and the provision of common services, the "spillover" process, they argue that the system might in time be conducive to building foundations for political cooperation (association).

Although some functionalist scholars including Haas and Mattli adopt the underlying assumptions of functionalism, they developed neofunctionalism to shed the normative and utopian ballast of its predecessor. By removing the normative and utopian aspects, these explanations achieve greater analytical clarity and value. In short, neofunctionalism adds to the argument by the extent to which the motives of sovereign states confer their authority to supranational institutions when their specific interests and aims are met. This perspective, which uses material interest as a driving force in explaining regional institutions, can be combined with development from neoliberal institutionalism.

Neoliberal institutionalists including Robert Keohane and Robert Axelrod highlight the ability of international institutions to help ameliorate international problems, particularly international market failures. They argue that international institutions often provide formal settings which can play valuable functions in drawing inter-state cooperation (Keohane, 1994). International institutions offer legal liability that enables the establishment of stable mutual expectations about others' patterns of behavior which decreases the transaction costs of legitimate bargains. They view international institutions as offering a vital mechanism for interaction, transparency, and reciprocity which fosters international cooperation. Thus, international institutions play a key role in ameliorating the security dilemma and decreasing the risk of exploitation that often obstructs cooperative outcomes (Alexlrod & Keohane, 1986). However, this neoliberal institutionalism could not embrace the dynamics of regional institutions.

2. Second (New) Wave Theorizing

This study proposes that the pre-existing theoretical approaches are less effective in solving the puzzle regarding the variation of regional integration design. For instance, Shaun Breslin and his colleagues point out that one of the tendencies in the second wave theorizing is that it is more multifaceted and multidimensional than in the previous decades. This implies that two bifurcated domains, which are domestic elements and global aspects, can be intertwined into the analysis of regionalism. Shaun Breslin and his colleagues also understand that new regionalism is seen "as a way of securing greater competitive access to global markets as opposed to regional autarchy" (Breslin, Hughes, Phillips & Rosamond, 2002). This study will revisit this insight when the hypothesis is being tested.

This study also notes that second wave theorizing with regard to regionalism is attempting to propose the following: Scholars in the new regionalism believe that earlier theoretical paradigms i.e. (neo) functionalism, intergovernmentalism, neoliberal institutionalism , which are more or less under the umbrella of rationalism, should merge with the constructivist way of understanding world politics. In short, the 'bringing in' of the sociological approach, which emphasizes the norm, identity and socialization under the umbrella of constructivist lens, might conflict less with Karl Deutsch's security community. In this sense, this study sees that revisiting the legacy of the security community might be a right step for the scholars in the new regionalism. Thus, dialectical and eclectic way of combining rationalism and constructivism might be one that new regionalist pursues.

Testable hypothesis and methodology

Given the dependent variable is the rationale of regional institutions in the LDC, particularly the Southern Cone area, this study poses one independent ideational variable, which is more compelling than the material one.

Hypothesis: if there is common threat (legacy of neoliberal; US dominance (influence) then, regional nations are more likely to form regional institutions. In the similar vein, if the member countries have a culturally embedded identity, then the regional institution can easily be formulated.

To support the hypothesis, an empirical case is provided below.

Empirical cases: South America's tendency - turning to the Left and forming Regional based Institutions Latin American, particularly South American economic and social policy is at a turning point. The emblem of that turn is the growing list of successful presidents who ran against neo-liberalism - Hugo Chavez in Venezuela, Luiz Ignacio Lula da Silva in Brazil, Tabare Vazquez in Uruguay, Cristina Fernandez de Kirchner in Argentina, Michelle Bachelet in Chile, and Evo Morales in Bolivia, Correa in Ecuador; finally in the recent election in El Salvador, presidential candidate Mauricio Funes (FMLN — former Marxist guerillas) was elected - and the near misses of populist candidates in Mexico. In many of these countries, presidential campaigns have turned into social movements that have continued after the elections, with peasant marches in Ecuador and Bolivia, enormous rallies in urban Mexico, factory takeovers in Argentina, and mobilization in the slums of Venezuela, fomented by weekly presidential addresses. The battle cry that unites these movements is a call to end the so-called Washington Consensus, with its commitment to markets as the arbiters of economic activity. These leftist regimes are riding a wave of discontent directed against the market (Piore & Schrank, 2006.

Most Latin America countries including South America adot the notion of neoliberal policies which is endorsed by the IMF and the World Bank (Washington Consensus) under the US influence throughout the late 1980s. Since that time, the national income increased largely over the Latin American continent; thus, it could be considered that overall poverty has been lessened. However, the major problem is that the government that endorsed the Washington Consensus could not effectively manage the inequality between peoples or even implicitly and explicitly disregard this matter in favor of their priority policy.Thus, the intra-migrations have widely revealed that the people who went to the urban area could not afford to stay inside the city due to the lack of financial resources and shortage of housing. Thus, they settled down near urban areas, resulting in formation of slums. Additionally, inter-state migration has also been shown. This domestic issue can be one of the notable factors affecting why constituents voted for an alternative candidate rather than presidential candidates who champion the neoliberal policies (generally the incumbent candidate prior to this decade). This explains in some respect why Latin America as a whole is turning to the left.

In this light, the most salient leader, Venezuelan president Hugo Chavez who proclaims the 21st century socialism in Latin America took the initiative to launch ALBA (Bolivarian Alternative for the Americas), which is the first project of Latin American integration. Under ALBA, various cooperation initiatives were formed for the development and distribution of energy among member countries. It also includes the regional media project with the creation of TELESUR. Beyond ALBA, there is trade agreement signed in October 2004 between MERCOSUR and the Andean Community of Nations. Along with this regional movement, Banco del Sur (Bank of South) was launched under an initiative by Hugo Chavez. Its intention is to function as an alternative to borrowing from the IMF and WB, thereby avoiding theWashington Consensus (Dello Buono & Bell Lara, 2007, p. 9).

Despite neoliberalism dominating over Latin America, particularly South America, a growing grass-roots movement within these nations-states has long desired to change from the neoliberal regime to a regime which embraces and understands their situation better.Thus, these nation states and their respective movements voted for the left and center left presidential candidates in order to change the direction against the one-way neoliberal policies which is endorsed by the most powerful nation-states.This phenomenon can be partly explained by the critical theorists.That is, international institutions, particularly international finance institutions that can be influenced by the 'North' are more likely to impose their policies of interest on the 'South.' That policy is typically faceted in (neo) liberalism. In these circumstances, from the perspective of the people, the expected outcome was not favorable or even worse in some re-spects.Thus, they have been yearning to change this neoliberal policy, and then they used the voting power to do so. In short, this movement towards socialism could be explained and/or understood by some scholars, particularly critical theorists.

The remaining question that needs to be answered is how to explain the regionalism more specifically, Latin Americanism (South Americanism). These critical scholars might not be expected and may be less capable of explaining the extent to which Latin America (South America) is attempting to integrate as the EU did in some respects. So, some regional institutions including the Andean community and Mercosur are partially in the process of forming Custom Unions and even Common Markets which should come before creating an Economic Union. In the logic of regional integration, Walter Mattli, considered a neofunctionalist, argues that the EU's motivation for integration is largely material interest based

The rationalist would argue that the material interest aspect is one major forcing power in enhancing EU integration. But then, understanding that Latin Americanism can be energized against theWashington Consensus is it feasible to explain Latin American regionalism by just the 'material interest' independent variable? If not, which explanatory variable needs to be taken into account? In the next section, this study discusses that the identity variable should be considered to understand this equation.

Identity variable as either causal variable or intervening variable

Given the extent to which international institutionalism is championed by the developed nations could not embrace all the developing nations, this mechanism functions to force the marginalized nations to institutionalize regionally based organizations. Then, why does not it happen earlier, why at this time? The further question would be why some countries are ardently engaging regional institutions, while other marginalized nations are less? In these important questions, this study seeks to find what is the driving force or intervening variable, instead, only viewing the material in explaining and understanding regionalism, particularly South American regionalism.

Peter Katzenstein (2005, p. 219) views European regionalism as centered from a perspective of state bargains and legal norms, whereas Asian regionalism as market transactions and ethnic or national capitalism. Then, when considering the American regionalism with respect to the NAFTA and Mercosur (Mercado Comun del Sur or the Southern Common Market), he states that "NAFTA represents a mostly contractual approach based on legal dynamics, and Mercosur represents a participatory approach based on political dynamics" (Katzenstein, 2005, p. 231). He argues that "regionalism in the Americas thus offers a hybrid of European and Asian elements" (p. 231). As Katzenstein argued that, South American regional institutionalism is different than that of its North American counterpart. The South American version, including MERCOSUR has more political connotation rather than economic interest priority. In this same sense, as Zibechi has pointed out, MERCOSUR's strategy has two main objectives:

to counteract the free trade agreements yet to be subscribed between the US and Colombia, Peru and Ecuador; and to tighten the bonds in order to forward the formation of a Community of South American Nations, an endeavor undertaken by Brazil, which has been followed, with different degrees of enthusiasm, by several of its Mercosur partners. All in all, it is a race against the clock to win those that are still hesitant, in which George W. Bush has solid allies like Alvaro Uribe's Colombia, while Mercosur counts on Latin-Americanist Hugo Chavez (Zibechi, 2004).

In the same vein, Richard Harris and Jorge Nef state that "Argentina, Bolivia, Brazil, Ecuador, Venezuela, and Uruguay support the establishment of a South American regional economic union as an alternative to the NAFTA-like FTAA advocated by the United States" (Katzenstein, 2005, p. 309).

As I illustrated earlier, as an alternative to the US sponsored FTAA, Chavez has proposed the Alternativa Bolivariana para las Americas (Bolivarian Alternative for the Americas or ALBA), named after his hero Simon Bolivar, one of the 19th century liberators of South America from Spanish colonial domination. Chavez's proposed ALBA would require the richer countries in the Americas to contribute to a "compensation fund" that would be used to correct the economic and social inequalities in the region by financing the development of the poorer countries in a manner similar to that of the European Union (Harris, 2005, p. 403).

Given the aspiration to the extent which South America and even Latin America as a whole is approaching integration like EU, which as Katzenstein noted, is a political dynamic leading factor in developing South American regional insti-tutionalism. The regional identity variable should be taken into account in this equation. It is relevant to apply the South American regional integration cases to Rawi Abdelal and his colleagues (2006) analytical framework to see whether the identity variable is valid in explaining and understanding the South American case. They attempt to operationalize identity into a research framework. In their analytic framework, Abdelal and his colleagues categorized two dimensions — content and contestation. In the defining of the content of identity, they focus on four factors: constitutive norms (formal and informal rules that define group membership), social purposes (goals shared by members of the group), relational comparisons with other social categories (defining an identity by what it is not), and cognitive models (worldviews/understandings of political/material conditions and interests shaped by an identity). In this analytical framework, I employ relational comparisons and cognitive models into the model of South American regional integration. Abdelal and his colleagues (2006, p. 698) defined the relational comparisons in an identity that "may be defined by what it is not, i.e., by some other identities". The existence of being the "identity" can be realized by the "otherness." In this sense, I see that if the US hegemony, more specifically, the intention of FTAA over the Latin America under the neoliberal-ism by the US does not exist, it is less likely that there will be a salient South American regional identity to counteract against the US influence.

In the vein of cognitive models, this study sees that cognitive models provide the way of seeing and understanding the world. Thus, given the similar, less exclusive in terms of culture, race, history, language, among South American nations, these factors have forces that move towards the regional institutionalism, once the necessaries have been faced among South American nations. In short, regional identity has relevant room which scholars consider how and why regional institution, particularly South American regional integration has widely demonstrated.

In this way of supporting this hypothesis, Higgott and Phillips (2002, pp. 359-379) also view that the disillusion occasioned by burgeoning social dislocations —consequent upon shifts in employment structures and tax burdens— combined with a marked resentment of both private financial agents and IMF-Treasury elites in the aftermath of financial crisis to produce a generalized backlash against globalization, of which trends in South America form part (p. 71) [italics is mine].

conclusion: contribution and Limitation

In terms of "research program", as far as I see, there is a gap that scholars do not cover actively in the name of regional integration, particularly the South American cases. In this sense, this study poses an important question in the real world, more specifically case (region) selection as well as the theoretical approach. This study has a dependent variable, which is the rationale of regional institutionalization over South America. To solve this dependent variable, the independent variable was the regional identity, which is how South American region-based identity understands and reacts towards the neoliberalism, which is endorsed by US and other advanced nations. The independent variable has been discussed under the umbrella of the hypothesis.

This study will try to find as to whether the South American regionalism has room to play in this mechanism that oppressed and/or left-behind nation states are gathering, and then institutionalizing regional institution to protect or have more voices to have better leverages. In this sense, this study will apply the regional identity which can be either causal or the intervening variable in explaining the way South America regional institutions have been developed.

We know that something is "out-there" as a conventional wisdom, but the problem is how to crystallize this wisdom into a relevant and tangible mechanism. In this respect, the limitations of this research proposal are that since the identity variable is less likely to be a rigorous and parsimonious factor, this study might be less testable, and thus will face criticism. To defend the criticism and even develop this study, we need to obtain the field research — i.e., interview and access to Spanish/Portuguese written papers. Within the gathering of data, this study can have quantitative methodologies along with a quantifiable one.

While I realize that this research proposal needs enormous revisions and amendments, the contribution of this research proposal will show how South American regional institution can be understood by the (regional) variable which few scholars empirically employ in the South American cases.


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The Unions of South American Nations [online] Available: (June 24, 2009)

1 The homogenizing nature of the neoliberal dynamic associated with the process of globalization is widely accepted.

2 Arguably, the nature of Mercosur is more about trade and profits rather than other ends.

3Argentina, Brazil, Paraguay and Uruguay singed the Treaty of Asuncion, creating Mercosur on 26th March, 1991

4Bolivia, Colombia, Ecuador, and Peru are the members of Andean Community of Nations, which is a trade bloc.

5Unions of South American Nations.

6Anarchy is ordering principle; it means that there is no centralized authority or ultimate arbiter that stands above states.

Economía del Caribe
Revista de economía de la Universidad del Norte

Universidad del Norte
Barranquilla (Colombia)