Towards a new design of South American integration? Jean Monnet/Robert Schuman Paper Series, Special Issue January 2013

The design of South American integration is becoming different. This has been quite common in the trajectory of over six decades of initiatives aimed at generating institutional frameworks to facilitate regional integration. However, even when it has become apparent that the previous design is undergoing a new process of change, it would be difficult to predict for how long the one that is beginning to take shape will remain in effect. The experience of recent decades suggests great caution in forecasts that are optimistic about any eventual longevity. Several factors are contributing to this redesign. Some are external to the region while others are endogenous. The combination of these factors will influence the future design of South American integration. If past lessons are correctly capitalized and certain advantage is derived from the leeway provided by a decentralized international system with multiple options, we can anticipate that what will predominate in the region will be multidimensional integration agreements (with political and economic objectives at the same time) and with cross-memberships and commitments. If this were the case, the actual impact on regional governance, social and productive integration and the competitive insertion at a global scale will depend largely on the following factors: the quality and sustainability of the strategy for development and global and regional insertion of each country; the combination of a reasonable degree of flexibility and predictability in the commitments made and their corresponding ground rule, and the density of the network of cross-interests that can be achieved as a result of the respective regional integration agreements, reflected in multiple transnational social and production networks.

The simple macroeconomics of North and South in EMU. Bruegel Working Paper 2012/12, 30 July 2012

The euro area today consists of a competitive, moderately leveraged North and an uncompetitive, over-indebted South. Its main macroeconomic challenge is to carry out the adjustment required to restore the competitiveness of its southern part and eliminate its excessive public and private debt burden. This paper investigates the relationship between fiscal and competitiveness adjustment in a stylised model with two countries in a monetary union, North and South. To restore competitiveness, South implements a more restrictive fiscal policy than North. We consider two scenarios. In the first, monetary policy aims at keeping inflation constant in the North. The South therefore needs to deflate to regain competitiveness, which worsens the debt dynamics. In the second, monetary policy aims at keeping inflation constant in the monetary union as a whole. This results in more monetary stimulus, inflation in the North is higher, and this in turn helps the debt dynamics in the South. Our main findings are: •The differential fiscal stance between North and South is what determines real exchange rate changes. South therefore needs to tighten more. There is no escape from relative austerity. •If monetary policy aims at keeping inflation stable in the North and the initial debt is above a certain threshold, debt dynamics are perverse: fiscal retrenchment is self-defeating; •If monetary policy targets average inflation instead, which implies higher inflation in the North, the initial debt threshold above which the debt dynamics become perverse is higher. Accepting more inflation at home is therefore a way for the North to contribute to restoring debt sustainability in the South. •Structural reforms in the South improve the debt dynamics if the initial debt is not too high. Again, targeting average inflation rather than inflation in the North helps strengthen the favourable effects of structural reforms.

Redrawing Identity Boundaries through Integration Policies: Strategies of Inclusion/Exclusion of Immigrants in Québec and South Tyrol. EDAP Paper 01/2013

Following the research agenda introduced by Will Kymlicka, this qualitative study offers an interpretation of how the sub-national elites of Québec and South Tyrol police the integration of immigrants. For these national minority groups, which are constantly undergoing a process of redefinition of their collective identities by differentiating themselves from the Others who do not belong to the in-group, immigrants have progressively become the most significant Others as they are not part of the original system of compromises. This article questions how sub-national elites are handling this relatively new kind of ethnocultural diversity brought about by large-scale permanent immigration on two levels: first, the political narrative of the ruling sub-national parties, their electoral appeals, manifestos and speeches; second, the policy arrangements for the integration of immigrants in education, language and social policy. The initial approach of the article is pessimistic, as it assumes that sub-national elites will marginalize immigrants to please core nationalist supporters. In fact, the hypotheses to be tested are whether the national minority groups of Québec and South Tyrol engage in a process of reconstruction of their ethnic identity bounded by opposition to real or imagined Others – the newcomers; and whether they adopt practical measures that force newcomers to be assimilated into the group or to be marginalized. The comparison between Québec and South Tyrol provides a basic understanding of the impact of immigration in two sub-national polities that are very different, but still adopt similar political narratives and policy strategies with regard to the integration of newcomers.