The impact of regional integration of trade: Theoretical and empirical review

Abstract

Regional integration (RI) is a global phenomenon that has existed for a long time, its ultimate goal is the development of member countries. Several authors have tried to precisely develop this concept but have not been able to produce a universal definition of it. Indeed, its multidimensional character can take several forms, going from a simple creation of economic links between nations and even between individual units within a national economy, to a complex social phenomenon whose economic content is closely related to the political aspect. The same observation can be made with regard to the phases that this regional integration can take, which, according to economic theory, go from a free-trade zone characterized by the abolition of customs tariffs towards mutual trade to total economic integration determined by a common economic policy. The objective of this work is to analyze the theoretical framework of the regional integration through the enumeration of this phenomenon’s different types and various conceptions. Also, this article aims to pay particular attention to this integration’s impact on bilateral trade, thanks to the theories dealing with integration such as the neoclassical theory of customs unions which aims to study the abolition of customs borders effects on trade, the theory of the new geographical economy which attempts to provide information on the place where certain industries produce goods and on their distribution in space, as well as the theory of the new institutional economy which emphasizes the way in which institutions, new or already existing, can influence the interactions between economic agents, on one hand, and thanks to the empirical studies that have dealt with the question of the integration’s impact on trade, on the other hand.

JEL Classification: F1, F2, F4

Paper type: Theoretical Research