Economic Determinants of Regional Integration in Developing Countries

Abstract

Regional integration is often viewed as a way to support development and economic growth in developing countries through the related with it benefits to trade and welfare. Economic integration theory goes through two development stages each of which addresses the political and economic context relevant for its time. The first stage is regarded as classic theory or static analysis and includes the traditional theories of economic integration that explain the possible benefits of integration. The second stage includes the new economic integration theories that are often referred to as dynamic analysis of economic arrangements. Besides these two, there is a third type of integration theories that deals with the effects, benefits and constrains of the economic integration arrangements of developing and least developed countries because in most cases, theories of economic integration and its benefits – of dynamic ones, but even more of static ones, are not fully applicable to integration agreements among developing and least developed countries. The current paper tries to come up with a conclusion on what parts of classic and new integration are applicable to the integration arrangement among developing countries and tries to summarize these theories in three main groups – general economic, market-related and trade-related factors and effects.