Globalization and European Regional Integration

The two main current trends in the world economy are regionalism and globalization. It remains still largely unclear, however, how these two trends interact and what the implications of such an interaction for the world economy are. In this paper I consider one aspect of the interaction among the two trends: whether increased globalization will favor a more “open” regionalism, i.e. a tendency towards the progressive enlargement of regional agreements to outsiders. Discussion relates to the European experience. The relationship between globalization and regionalism presents both a deepening and a widening dimension. It is considered why globalization should influence the process of regional widening by fostering a process of convergence among countries participating in a regional trade agreement. The analysis of the European experience is carried out by looking at the evolution of FDI activities, international mergers and acquisitions and FDI specialization in Europe over the period following the announcement the Single European 1\’Iarket as well as at the characteristics of a number of industrial sectors where multinational activities are particularly relevant. The relationship between trade specialization and investment specialization in the four largest European economies (Germany, France, Italy and the UK) is then considered. Finally we consider the experience of four “peripheral members” of the EU (Greece, Ireland, Portugal and Spain) from the point of view of trade specialization and FDI inflows and we discuss the perspectives of future EU enlargements.