Regional Cooperation and Integration (RCI) and Trade-Driven Competitiveness - Is There a Relation to Inclusive Growth? - Overview of Economic Literature

Abstract

This paper overviews literature which studies and discusses value chains, economic corridor and cluster development as part of a regional network structure along which goods, knowledge, and technology are exchanged by economic agents. The overview examines how regional geography, history, and structure determine the patterns of innovation, diversification, and specialization in a region. It synthesizes literature which examines how model functional forms, their scale and resolution of regional impact determine the significance of impact, which can be observed from models by policy makers. Finally, the paper identifies literature which relates Regional Cooperation and Integration (RCI) policy targets, with mechanisms (so-called drivers), and to a variety of policy instruments, which together and individually through their effect on the drivers affect these targets. The paper organizes these concepts -- policy instruments, drivers, targets -- with a process map. The process map describes then an impact assessment system for the systemic analysis of the relation of such policy instruments to desired economic outcomes. Furthermore, an agent-based simulation model, in conjunction with an interactive knowledge platform, can potentially fulfill all the requirements of such impact assessment system, as detailed in the paper. A particularly attractive feature of simulation models is that they can be used as observatories in which regional policy experiments can be conducted. The paper sums up the literature on why Regional Cooperation and Integration can be a significant factor in increasing regional economic competitiveness and inclusive growth.

Keywords: Total factor productivity, Productivity dispersion, Inclusive growth, Welfare, Global value chains, Smart specialization in trade, International (real) competitiveness, Regional Economic Integration, Economies of scale in geography, Regional economic geography, Asia

JEL Classification: C15, D24, D57, F12, F13, F15, L25, L40, O31, O47, R13