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Economic and financial integration (hereafter, economic integration) among economies has been a fertile area of research. Yet, what we argue is that economic integration needs new thoughts to adequately model the recent challenges to the global economy by developing a new index/measure of economic integration. The new index will not only shed invaluable insights into the drivers of economic integration between Australia and the Middle East but will also help craft economic, trade, and commercial policies to achieve the desired type of integration with Australia's trading partners. Our analysis is undertaken on a cross section of 140 countries for the year 2011, to understand the causes and indicators of integration. Our model combines changes in real GDP, per capita GDP, percentage of educational expense, and gender inequality as causal factors to explain integration as a latent variable. We use three indicators of integration: (1) a standard measure of economic integration, (2) exports and imports as a percentage of GDP, (3) flows of foreign direct investment. We then explore the linkages between these indicators, or manifestations of integration, and a number of its possible causes. In terms of the new index we rank 140 nations and note that Australia is ranked among the top 20 nations in terms of integration with the global economy. Except Israel and Oman, Australia's trade partners in the Middle East have little integration with the global economy. In a similar vein, we also find that Australia's northern neighbors – especially Indonesia, Malaysia, Thailand, Cambodia, Myanmar, Sri Lanka, India – are yet to get well-integrated with the global economy. As a result, we argue, Australia can lead these countries from Southeast Asia and the Middle East to form closer ties with the global economy via Australia and, by doing so, Australia can create unprecedented economic and social benefit.

For the past decades, issues concerning the impact of economic integration on financial integration, especially exchange rate integration, has been criticized among several regions such as ASEAN. This chapter intends to: (i) test for the exchange rate integration among the ASEAN-5, including Indonesia, Philippines, Malaysia, Singapore, and Thailand, using panel data techniques; and (ii) determine the impact of economic integration on the level of exchange rate integration among the ASEAN-5 countries. The purchasing power parity (PPP) is tested using panel unit root tests on monthly data. The results confirm the PPP among the ASEAN-5 countries due to lower transaction costs from ASEAN agreements. The chapter applies Multivariate GARCH (M-GARCH) models using daily data to determine the level of exchange rate integration among the ASEAN-3, including Malaysia, Singapore, and Thailand. The results of panel cointegration tests using quarterly data of economic integration and exchange rate integration confirm the impact of international trade openness on exchange rate integration. With free trade agreements leading to lower trade barriers, lower transaction costs, and low transportation costs, the economic integration among ASEAN countries practically leads to a higher degree of exchange rate integration. The findings imply that trade liberalization has the strongest effect on the real exchange rate. As such, regulators of ASEAN countries should pay more attention to the exchange rate policies of each other because of the interdependence of their exchange rates.

This chapter investigates the evolution of cross-strait economic relations and Asian regional integration and its implications for future development in the region. Trade and investment in Asia is fundamentally market-driven, and cross-border FDI is the major driving force. This investment-induced trade explained the cross-strait economic relations and intensive trade in intra-industry and intra-regional trade in Asia. The rise of China in 1990s with the assistance of Taiwanese firms further accelerated the trend of integration by forming regional production networks. However, after 2000 institutional arrangement like bilateral or plural-lateral FTA emerged to normalize and institutionalize the de facto economic integration. RCEP and TPP have evolved as the two major platforms for Asian regional cooperation with two key players, China and the United States, on each side. We argue that in the long run the win-win solution that the two platforms will further merge into FTAAP, which benefits all participants including China and the United States. However, in the short run, based on its 50 years of developmental experience, Taiwan can play an important role to promote and consolidate Asian regional integration as a technology provider and resource coordinator for the region and a risk buffer for entering Chinese market. We thus propose a roadmap for Taiwan and China to jointly participate in regional integration process. In the intermediate run, Asian economies need to change the structure toward more regional-centered trade in final goods through domestic consumption market in order to reduce the dependence on Western markets and mitigate any loss may arise from external shocks.

“It should also be noted that the objective of convergence and equal distribution, including across under-performing areas, can hinder efforts to generate growth. Contrariwise, the objective of competitiveness can exacerbate regional and social inequalities, by targeting efforts on zones of excellence where projects achieve greater returns (dynamic major cities, higher levels of general education, the most advanced projects, infrastructures with the heaviest traffic, and so on). If cohesion policy and the Lisbon Strategy come into conflict, it must be borne in mind that the former, for the moment, is founded on a rather more solid legal foundation than the latter” European Commission (2005, p. 9)Adaptation of Cohesion Policy to the Enlarged Europe and the Lisbon and Gothenburg Objectives.

We examine how the degree of regional financial integration in African stock markets has evolved over the last eleven years. Despite increasing regional economic cooperation, the process of stock market integration has been slow. To facilitate growth via developed financial markets but keep financial stability risk at a minimum, further regional integration should be promoted, and mild capital controls on non-African investors may be necessary. A Diebold-Yilmaz spillover analysis is applied to ten African stock markets for the period between August 2004 and January 2015. We examine spillovers among four regions and among individual countries. Regional integration, as measured by total spillovers in Africa, is increasing but remains very low. These spillovers were temporarily heightened during the global financial crisis. Cross-regional spillovers are high between Northern and Southern Africa. Asymmetric capital controls on African and non-African investors must be considered to foster further regional integration and to mitigate financial stability risk. This is one of the few studies to address the construction of the future architecture of regionally integrated stock markets in emerging countries.

This study is motivated by the fact that even though many African countries have witnessed rapid growth, they have also experienced high volatility in the form of severe financial crises, especially in the last two decades. These developments naturally lead to the issue of whether, in a more integrated global economy, the relationship between growth and output volatility has changed. The phenomena have also raised questions on whether the growth–output volatility relationship can be linked to the growing pains seemingly associated with rising trade and financial integration. This chapter attempts to provide answer to these questions by providing insights on how trade and financial integration affect the relationship between growth and output volatility using data from selected Africa countries. The study explores in detail the relationship between growth and the volatility of output components (consumption and investment). Our main result is that there is a positive growth and output volatility impact of trade openness and integration with the international financial market. The relationship between growth and financial integration and investment volatility is stronger in the long run than in the short run, while the consumption volatility impact of trade openness is higher in the long run than in the short run, suggesting that countries that are more open to trade appear to face less severe trade-off between growth and volatility.

The continued flow of immigrants in various countries, including Finland, has made it necessary to assess their level of integration for both academic and policy reasons. Despite the proliferation of multiple immigration integration indices, none of them are irreproachable. The indicators of integration levels are context-dependent. The index should also be both standardized to facilitate cross-comparative research and flexible to be relevant across multiple contexts. The choice of the unit of analysis also alters the definition of integration.

The main purpose of this study is to identify the indicators of immigration integration levels at the individual level in the Finnish context. Thereafter, a combined index identifying six types of integration measures – psychological, linguistic, economic, political, social and navigational – based on the Immigration Policy Lab (IPL) Integration Index, is administered to foreigners in Finland (N = 86). The sample consists of young (20–40), highly educated individuals, from 36 different countries who have migrated to Finland predominantly for family and study purposes.

The results show that immigrants who have stayed longer in Finland and are highly educated display higher levels of integration. Immigrants who are naturalized citizens display higher levels of integration across all dimensions. IPL Integration Index performs in the expected direction and can be applied across Finland in a larger random sample, after slight modifications, to increase generalizability. The study further suggests that Finnish immigration integration schemes focus excessively on macrolevel policies aiming at linguistic, economic and navigational integration of new immigrants at the cost of individual psychosocial integration of well-established immigrants.

The greatest challenge facing most economies today is how to grow their economies and reduce over-dependence on imports in the midst of increasing integration of world economies. Addressing this challenge seems to be difficult despite all efforts by policymakers at different times to salvage the situation, the problem persists as evident in the global financial crisis of 2008 and the Eurozone crisis of 2012 which were generally viewed as a glaring illustration of limitless pursuit of economic integration and governance failure at the expense of carefulness, prudence, due diligence, and regulation. It also reflects the lack of proper coordination and lack of proper economic integration facing most emerging market economies of the world. Against this background, this study focuses on the reexamination of the impact of trade openness (TOP) and financial openness (FOP) on economic growth in emerging market economies. The direct and interaction effect of the both openness variables on economic growth in these markets is investigated using data from 2000 to 2017 adopted from World Development indicators of the World Bank. Over 30 emerging market economies covering Asia, Latin America, and Europe are included in the study. For empirical analysis, the study uses one measure of FOP: de facto (total capital flow) variables following Aizenman and Noy (2009) and a measure of TOP as total trade–GDP ratio. The study applies the Dynamic Panel Approach, that is, the Arellano–Bond GMM estimation technique and Granger Causality Test to address the objectives. The results of this study show that TOP has a positive and significant impact on all the countries studied, whereas FOP has positive but no significant impact on economic growth of these countries, implying that these countries have not harnessed the benefit of financial liberalization and integration. It is recommended that the emerging market economies should open not only their economies to trade but also open their economies to finance so as to reap the benefits of FOP and integration.

The unequal distribution of economic activities, transposed in economic, social and territorial disparities is the general characteristic of the European economy. Gaps increased in the context of European Union (EU) enlargement towards Eastern and Central Europe and of the economic crisis, thus bringing new differentiations among member states’ economies. The main aim of the chapter is to emphasise the centre-periphery differentiations in the European economy, by using a composite index of peripherality, in order to better understand the determinants of growth and convergence in Central and Eastern European countries and to reach normative conclusions for increasing Cohesion Policy (CP) effectiveness. The first part of the chapter provides a short overview of the main theories and models of the peripherality analysis and the relationships between the centre and the periphery, in order to find out how this analysis relates to the research in the field. The second part provides a comparative analysis of the evolution of European economies during 2003–2014, in order to find out whether the EU enlargement process stabilised the EU core-periphery pattern or, on the contrary, the process of core-periphery structural convergence occurred. The third part includes the suggested model of analysis (methodology, data, and main results) from a multidisciplinary perspective, underlining the centre-periphery differentiations on the two axes, North–South and West–East. The results have been interpreted in conclusions, with a focus on their relevance for the European CP challenges.