Regional Integration, Growth and Convergence
This paper examines empirically whether and how regional integration leads to convergence and growth amongst developing countries. Using standard growth models for nearly 100 developing countries over 1970-2004 we cannot establish robust growth effects of regional integration as such at the aggregated level of analysis even after using alternative measures of regional integration. However, because we find that trade and FDI promote growth, and because regional integration tends to increase trade and FDI, regional integration still has a positive impact on growth in its members through the effects of increased trade and investment on growth. Further, country-specific growth diagnostics do suggest that regional integration can be a binding constraint to growth as “deep” regional approaches can help to address crucial rail, road, air and energy links amongst countries (e.g. in the East African Community). Our findings also suggest that initially high levels of regional income disparities will lead to greater decreases in disparities. Whilst the level of intra-regional trade and incomes do not explain changes in income disparities, the presence of a regional Development Finance Institutions (e.g. Central American or East African development banks) with a relatively high loan exposure to GDP ratio tends to reduce regional income disparities suggesting a useful role for deeper integration in achieving regional cohesion. A one percentage point increase in exposure by DFIs leads to a drop of σ of about one percentage point. Finally, while the macro economic literature on regional integration tends to highlight only limited expected effects of African regional integration itself, our work at the firm level in three African countries (Benin, Malawi and South Africa) is indicative of significant dynamic effects of regional integration through the effects on firm level productivity in Africa. We suggest that in the future, further growth analytical work is undertaken which combines the development of methods to examine the effects of regions and measurement of the various types of regional integration.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
When requesting a correction, please mention this item's handle: RePEc:ris:integr:0527. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jong-Eun Lee)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.