The evolution of regional integration arrangements in the developing world

Abstract

This project is interested in explaining the puzzle of why some regional integration arrangements (RIAs) in the developing world have attained deeper levels of economic integration while others have not. By first noting that prevalent theories of integration do not adequately explain the evolution of regional integration in the developing world, I propose a theoretical model that argues that membership size and overlapping memberships have affected the deepening of economic cooperation in RIAs in the developing world. Membership size heightens preference heterogeneity, increases the cost of using side-payments, and exacerbates collective action problems that in turn limit the chances of deepening economic integration. Overlapping memberships splits states' loyalties, complicates the implementation of RIA rules and obligations, and reduces the benefits of regional integration that then also reduce the probability of deepening economic integration. These two hypotheses are tested quantitatively and qualitatively. 22 RIAs drawn from the developing world are evaluated. I develop original measures of depth of economic integration, the dependent variable, and overlapping memberships for the quantitative test. The findings from the quantitative evaluation lend support to the two hypotheses; although there is stronger support for the detrimental effect that overlapping membership has had on the depth of economic integration among these RIAs. Qualitatively, evidence shows the complications that membership size and overlapping memberships have had for several of these 22 RIAs and how these complications have contributed to shallow economic integration for some of these RIAs. The findings of this project point to the need to rationalize memberships in RIAs regardless of whether the goal is deeper economic integration. Additionally, these findings also show the need to strengthen institutions of RIAs that are tasked with managing integration. If states are to derive benefits from regional integration, institutional mechanisms that address collective action problems need to be empowered to better monitor and enforce RIA rules and obligations.