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The new regionalism : a country perspective

Author

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  • de Melo, Jaime
  • Panagariya, Arvind
  • Rodrik, Dani

Abstract

Regional integration is on the rise again, despite its apparent failure among developing countries in the past. The authors survey the ambiguous economies of customs unions, emphasizing that the traditional dichotomy between"trade creation"and"trade diversion"is not particularly helpful for policy. In a world with trade restrictions, regional integration presents certain advantages, including enhanced bargaining power and market access. The authors also point out that integration enforces arbitrage in institutions as well as in markets for goods and factors. This kind of arbitrage can lead to improved economic outcomes by making decision-making less sensitive to economically harmful factional interests - especially when regional institutions are designed properly. An empirical evaluation of existing schemes produces no evidence that membership in integration schemes has any effect on growth. Finally, the authors note that recent attempts at regional integration have different starting points and objectives than past efforts - so history is a poor guide to the future of regional integration.

Suggested Citation

  • de Melo, Jaime & Panagariya, Arvind & Rodrik, Dani, 1993. "The new regionalism : a country perspective," Policy Research Working Paper Series 1094, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1094
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    References listed on IDEAS

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    1. Langhammer, Rolf J. & Hiemenz, Ulrich, 1990. "Regional integration among developing countries: opportunities, obstacles and options," Open Access Publications from Kiel Institute for the World Economy 416, Kiel Institute for the World Economy (IfW).
    2. Bhagwati, Jagdish, 1990. "Departures from Multilateralism: Regionalism and Aggressive Unilateralism," Economic Journal, Royal Economic Society, vol. 100(403), pages 1304-1317, December.
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    5. Erzan, Refik & Yeats, Alexander, 1992. "Free trade agreements with the United States : what's in it for Latin America?," Policy Research Working Paper Series 827, The World Bank.
    6. Corden, W M, 1972. "Economies of Scale and Customs Union Theory," Journal of Political Economy, University of Chicago Press, vol. 80(3), pages 465-475, May-June.
    7. Berglas, Eitan, 1979. "Preferential Trading Theory: The n Commodity Case," Journal of Political Economy, University of Chicago Press, vol. 87(2), pages 315-331, April.
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    12. C. A. Cooper & B. F. Massell, 1965. "Toward a General Theory of Customs Unions for Developing Countries," Journal of Political Economy, University of Chicago Press, vol. 73, pages 461-461.
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    More about this item

    Keywords

    Trade and Regional Integration; Economic Theory&Research; Trade Policy; TF054105-DONOR FUNDED OPERATION ADMINISTRATION FEE INCOME AND EXPENSE ACCOUNT; Environmental Economics&Policies;

    JEL classification:

    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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