On the Economics of Regional Powers: Comparing China, India, Brazil, and South Africa
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A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Kappel, Robert Working Paper On the Economics of Regional Powers: Comparing China, India, Brazil, and South Africa GIGA Working Papers, No. 145 Provided in Cooperation with: GIGA German Institute of Global and Area Studies Suggested Citation: Kappel, Robert (2010) : On the Economics of Regional Powers: Comparing China, India, Brazil, and South Africa, GIGA Working Papers, No. 145, German Institute of Global and Area Studies (GIGA), Hamburg This Version is available at: http://hdl.handle.net/10419/47752 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. 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Copyright remains with the authors. the with remains Copyright venue. other any in publication limit not should and debate. publication academic constitute and not ideas does of series exchange Papers the Working encourage the to in paper a publicaton of to prior Inclusion progress in work of results research the disseminate to serve Papers Working GIGA GIGA Research Programme: Power, Norms and Governance in International Relations ___________________________ On the Economics of Regional Powers: Comparing China, India, Brazil, and South Africa Robert Kappel No 145 September 2010 www.giga-hamburg.de/workingpapers GIGA WP 145/2010 GIGA Working Papers Edited by the GIGA German Institute of Global and Area Studies Leibniz-Institut für Globale und Regionale Studien The GIGA Working Papers series serves to disseminate the research results of work in pro- gress prior to publication in order to encourage the exchange of ideas and academic debate. 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For any requests please contact: E-mail: [email protected] Phone: ++49 (0)40 - 4 28 25 - 548 The GIGA German Institute of Global and Area Studies cannot be held responsible for errors or any consequences arising from the use of information contained in this Working Paper; the views and opinions expressed are solely those of the author or authors and do not neces- sarily reflect those of the Institute. GIGA German Institute of Global and Area Studies Leibniz-Institut für Globale und Regionale Studien Neuer Jungfernstieg 21 20354 Hamburg Germany E-mail: [email protected] Website: www.giga-hamburg.de GIGA WP 145/2010 On the Economics of Regional Powers: Comparing China, India, Brazil, and South Africa Abstract As the conception of and debates on regional powers have been led by political science, this pa- per aims to contribute to the discussion from an economics perspective. Based on the discussion of different concepts of economic power—such as those of Schumpeter, Perroux, Predöhl, or Kindleberger—concepts of technological leadership, and the global value chain approaches, the paper develops a research framework for the economics of regional powers. This framework is then tested using descriptive statistics as well as regressions analysis, with a focus on the four regional powers Brazil, China, India, and South Africa. As economic power is relational, the re- lationship of regional powers to other nations in the region is analyzed. According to the findings, only limited statements on the economics of regional powers are possible: a regional power can be described as an economy with a relatively large population and land area which plays a dominant role in trade within the region and in the regional governance. The regional power develops its technological capacities, and its businesses act regionally and globally with increasing strength. Keywords: Brazil, China, economic geography, economic leadership, economic power, growth, India, investment, public goods, regional powers, regression analysis, South Africa, technological change, value chain, trade. JEL Code: A12, B1, B29, C01, F14, F15, F23, F59 Professor Dr. Robert Kappel is president of the GIGA German Institute of Global and Area Studies, a professor at the uni- versities of Hamburg and Leipzig, and a member of the GIGA’s Research Programme 3: “Socio-Economic Challenges in the Context of Globalisation” as well as of the GIGA’s Re- search Programme 4: “Power, Norms and Governance in International Relations.” Contact: [email protected] Website: http://staff.en.giga-hamburg.de/kappel GIGA WP 145/2010 Zusammenfassung Zur Ökonomie regionaler Mächte: Ein Vergleich zwischen China, Indien, Brasilien und Südafrika Während Konzeption und Debatte über regional powers maßgeblich von politikwissenschaft- licher Forschung geprägt sind, leistet das Working Paper einen Beitrag zur Theorie der re- gional powers aus wirtschaftswissenschaftlicher Perspektive. Ausgehend von der Diskussion unterschiedlicher Konzepte wirtschaftlicher Macht (beispielsweise von Schumpeter, Perroux, Predöhl und Kindleberger), Konzepten zu technologischer Führerschaft und der Forschung über globale Wertschöpfungsketten wird ein Forschungsrahmen für die wirtschaftswissen- schaftliche Analyse der regional powers entwickelt, der im Folgenden durch beschreibende Statistik und Regressionsanalyse an den Beispielländern Brasilien, China, Indien und Südaf- rika getestet wird. Da wirtschaftliche Macht ein relationales Konzept ist, wird die Beziehung der regional powers zu anderen Ländern der jeweiligen Region untersucht. Anhand der Er- gebnisse sind begrenzte Aussagen über die Ökonomie der regional powers möglich: Eine re- gional power kann demnach als eine Volkswirtschaft mit verhältnismäßig großer Bevölkerung und Landfläche beschrieben werden, die eine dominante Rolle im Handel der Region und der regionalen governance-Struktur einnimmt. Die regional power entwickelt ihre technologi- schen Fähigkeiten weiter und ihre Unternehmungen agieren mit zunehmender Stärke so- wohl auf regionalem als auch auf globalem Niveau. On the Economics of Regional Powers: Comparing China, India, Brazil, and South Africa Robert Kappel Article Outline 1 Introduction 2 The Rise and Fall of Nations 3 Economic Discourse Regarding the Role of Regional Powers’ Influence on Countries in the Region 4 Empirics, Categorization, and Systematization of Regional Powers 5 Conclusion: What Can the Economics of Regional Powers Contribute to Regional Powers Theory? 1 Introduction What is a regional power? Is the United States of America a regional power? Is Germany a regional power? Can a country like Nigeria be a regional power? How far does the power of regional powers reach? How can one measure the political and economic power of regional powers?1 What is a region? I define regions as geographical, economic, and political entities that have come into being over time and which are viewed in very different ways (Gode- hardt and Nabers forthcoming 2011). I assume that regions can be distinguished, from an economics perspective, by regional integration agreements; that is, there exist customs un- ions, free trade zones, or even joint markets and political integration. In this contribution, I use the term region in a more narrow sense: as economic and political cooperation and inte- 1 I would like to thank Joachim Betz, Nadine Godehardt, Dirk Nabers, Detlef Nolte and Cordula Tibi Weber for their helpful comments on previous versions of this paper. Thanks also go to Toman Omar Mahmoud for the construction of the regression analyses. 6 Kappel: On the Economics of Regional Powers gration. For the paper’s empirical analysis, however, the term is interpreted in another way: as the