ABSTRACT
Regionalism’s effect on international trade is unclear. For some observers, the development of regional economic relationships is both natural and inevitable. It is natural in the sense that even in this digitalized age, proximity still counts for a lot, Sellers who are close to their markets have lower transport and other logistical costs, and they are apt to be familiar with local market conditions and customs. Many businesses, when first contemplating a move outside the home market, initially locate in nearby states in an effort to ‘test the waters’ before embarking on a more global strategy. Thus, Canada and the United States are each other’s largest trading partners; the UK now conducts over 60% of its trade with mainland Europe, in spite of that state’s historical place as a global trader. Regions develop around an anchor country, which acts as the motor of growth for the other economies around it. Thus, the United States, Japan and Germany are seen as the core states for North America, Asia and Europe respectively. But what about Africa and South America? In the African case, it seems clear that South Africa is starting to play this role. As for South America, perhaps the anchor is Brazil, or is it the United States, with its important role as a key market for South American goods?
