Contents Explanatory not es vii A bbreviations ix Lisı of regional blocs and membership x 1. INTRODUCTION 1 il. FOSTERING COHERENCE BETWEEN THE INTERNATIONAL TRADING, MONETARY AND FINANCIAL SYSTEMS · 5 A. Building the international competitiveness of developing-country exporters 5 l. Conditions for competitiveness at the microeconomic level .... 8 2. Cornpetitiverıess of firms at the level of the national economy 11 3. Transnıission mechanisnıs between the national and the international econorny 16 U. Impacts of monetary and financial factors on developing countries' export performance 18 l. Impacts of exchange-rate changes on enterprise ı. nvestrnent and competı·t.·ı veness -?] 2. Sharp exchange-rate changes and developing countries' export performance 23 C. Policy adjustment with open capital accounts 27 l. Speculative flows induced by carry trade 27 2. Changing opportunities for speculation in ernerging market econornies 37 3. Speculative capital flows and real effects 39 4. The potential of un-coordinated national exchange-rate policies to control external accounts 45 5. A multilateral solution 47 iv 111. REGIONAL COOPERATION 51 A. The limitations of conventional thinking 54 1. Theoretical approaches to regional integration 54 2. The role of geography, history and politics 57 B. Regionalization and policy cooperation 60 1. Industrialization and the integration challenge 60 2. Bridging gaps and battling constraints 64 C. Regional cooperation and trade integration anıong developing countries 66 l. Forrns of regional cooperation and effective trade integration 67 2. Measures of regional trade integration · · 75 3. Composition of intraregional trade 79 4. The potential role of South-South regional trade agreements · · 82 D. Regional fınancial and monetary cooperation ···· · ·· · 88 1. Regional cooperation for payment facilities and short-terrn fınancing · · 9 2 2. Regional cooperation for development financing 97 3 · Exchange-rate mechanisms and monetary unions ···· · .. · 1 o5 4. Lessons from European rnonetary integration 1 o7 5. Conclusion / / / Notes 115 References J 21