Theoretical Aspects of Regional Disintegration and Its Consequences for International Competitiveness

Abstract

The Brexit referendum, in which Britain on 23 June 2016 voted to leave the European Union, revealed that regional economic integration in Europe does not have to be a one-way process. The vote also showed that economic theory lacks a deeper analytical explanation of the mechanics of disintegration. This research gap is the main motive for this paper, which aims to contribute to developing the theory of regional economic disintegration. The paper examines the implications of regional economic disintegration for the international competitiveness of economies in areas including trade and foreign direct investment (FDI). The study sets out the traditional view of integration as a process where countries deepen cooperation and subsequently switch to modes involving stronger commitment—starting from a free-trade area, followed by a customs union, a common market, an economic union, and, finally, complete integration. The author shows that this process may be reversed and turned into regional economic disintegration. Moreover, theoretical insights are discussed with respect to regional disintegration coming from the concepts of new intergovernmentalism and neo-functionalism.