Developing Global Institutions: Lessons to Be Learned from Regional Integration Experiences
The global economy, we are told, will not only allow the free movement of goods, but services and financial and real capital as well. The flow of information and capital has allowed firms to locate the production of components of final products at various locations around the globe while controlling production from their headquarters. Ultimately, we might experience the free movement of people as well. Kenichi Ohame [1990, 193] wrote that "we have to accept that national borders have little to do any longer with real flows of industrial activity." According to Ohame, information and knowledge, rather than military power, are the source of economic strength. This transformation will reduce the regulatory authority of national governments, but it is unclear how much authority will be transferred to global institutions and how much will remain with the multinational firm free from public regulation [Ohame 1990, 182-185]. Because Ohame implies that public regulatory authority will be diminished in the borderless economy, the success of this transformation process depends on multinational firms behaving like model global citizens [Ohame 1990, 211]. Perhaps, fortunately, the trip to the borderless world has been delayed by the global financial crisis of the late 1990s. This delay has allowed some who are not convinced that we are ready for a seamless system of international transfer of real or financial capital to question the arguments of the advocates of globalism. An avid free-trader, Jagdish Bhagwati [1998, 8] has written recently that "only an untutored economist will argue that, therefore, free trade in widgets and life insurance policies