Integration of Markets vs. Integration by Agreements

38 Pages Posted: 20 Apr 2016

See all articles by Nathalie Aminian

Nathalie Aminian

University of La Havre

K. C. Fung

University of California at Santa Cruz

Francis Ng

World Bank - Development Research Group (DECRG)

Date Written: March 1, 2008

Abstract

This paper provides an analysis of the two channels of regional integration: integration via markets and integration via agreements. Given that East Asia and Latin America are two fertile regions where both forms of integrations have taken place, the authors examine the experiences of these two areas. There are four related results. First, East Asia had been integrating via markets long before formal agreements were in vogue in the region. Latin America, by contrast, has primarily used formal regional trade treaties as the main channel of integration. Second, despite the relative lack of formal regional trade treaties until recently, East Asia is more integrated among itself than Latin America. Third, from a purely economic and trade standpoint, the proper sequence of integrations seems to be first integrating via markets and subsequently via formal regional trade agreements. Fourth, regional trade agreements often serve multiple constituents. The reason why integrating via markets first can be helpful is because this can give stronger political bargaining power to the outward-looking economic-oriented forces within the country.

Keywords: Trade Law, Free Trade, Trade and Regional Integration, Trade Policy, Emerging Markets

Suggested Citation

Aminian, Nathalie and Fung, K.C. and Ng, Francis, Integration of Markets vs. Integration by Agreements (March 1, 2008). World Bank Policy Research Working Paper No. 4546, Available at SSRN: https://ssrn.com/abstract=1103365

Nathalie Aminian

University of La Havre

Le Havre, 76057
France

K.C. Fung

University of California at Santa Cruz ( email )

Santa Cruz, CA 95064
United States
831-459-3273 (Phone)
831-459-5900 (Fax)

Francis Ng (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-473-8088 (Phone)
202-522-1159 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/fng

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