ECONOMIC interdependence among nations has increased sharply in the past half century. For example, while the value of total production of industrial countries increased at a rate of about 9 percent a year on average between 1964 and 1992, the value of the exports of those nations grew at an average rate of 12 percent, and lending and borrowing across national borders through banks surged upward even more rapidly at 23 percent a year. This international economic interdependence has contributed to significantly improved standards of living for most countries. Continuing international economic integration holds out the promise of further benefits. Yet the increasing sensitivity of national economies to events and policies originating abroad creates dilemmas and pitfalls if national policies and international cooperation are poorly managed.
The Brookings Project on Integrating National Economies, of which this study is a component, focuses on the interplay between two fundamental facts about the world at the end of the twentieth century. First, the world will continue for the foreseeable future to be organized politically into nation-states with sovereign governments. Second, increasing economic integration among nations will continue to erode differences among national economies and undermine the autonomy of national governments. The project explores the opportunities and tensions arising from these two facts.
Scholars from a variety of disciplines have produced twenty-one studies for the first phase of the project. Each study examines the heightened competition between national political sovereignty and increased cross-border economic integration. This preface identifies