The evolving nature of economic integration

The resolute return of politics aiming to influence the design and shape of international trade policymaking is one of the most dramatic developments in international economic relations recently. The increased securitization of economic policy and calls for ‘de-risking’ value chains and diminishing external dependencies of potentially strategic importance are bound to transform trade relations. This trend leads trade diplomacy into unchartered waters determined by the desire for global competition rather than cooperation. Although transnational economic intertwining remains significant, the political pressure for rethinking economic decisions to align with domestic political calculus is the strongest in a generation. Calls for ensuring that domestic economic needs and prosperity are served by trade policy and upgrading economic policy to serve foreign policy and national security are now widespread, spearheading a wave of growing unilateralism and increasing levels of disenchantment with the underpinnings of economic integration. As the world changes, so does the political economy of economic integration. The interaction of political and economic forces that shape the process and outcomes of economic regulation and integration at the domestic, regional, and global levels has become more sophisticated, calling for a meticulous review of existing theories, a more careful analysis of new concepts, and more empirical work. This Article critically reviews existing theories of economic integration, identifies recent developments, structural trends, and changes in the political economy of economic integration but also discusses the political economy of economic disintegration. It focuses in particular on well-established concepts in international political economy, such as geography, power, digitalization or investment, and a careful review of theories of economic integration in light of the current political landscape. Throughout the Article, we also discuss the evolving role of the World Trade Organization (“WTO”) as a key player in globalization, a key target of the anti-globalization movement, and a key forum for international cooperation and contestation in the near future.