Does Regional Integration Matter for Inclusive Growth? Evidence from the Multidimensional Regional Integration Index

62 Pages Posted: 22 Feb 2019

See all articles by Cyn-Young Park

Cyn-Young Park

Asian Development Bank

Racquel Claveria

Asian Development Bank

Date Written: October 19, 2018

Abstract

This paper employs a multidimensional approach to gauge the degree of regional integration and analyze impact on growth, inequality, and poverty. It constructs a multidimensional regional integration index (MDRII) series that embodies six key facets of regional integration: (i) trade and investment, (ii) money and finance, (iii) regional value chains, (iv) infrastructure and connectivity, (v) movement of people, and (vi) institutional and social integration. The MDRII confirms that regional integration is most advanced in the European Union which scores high in all six dimensions; Asia comes second with the largest contribution from infrastructure and connectivity. Empirical analysis suggests significant and positive development impact of regional integration even when trade and financial openness is controlled. The regional value chain, movement of people, and institutional and social integration dimensions have been significant drivers of economic growth. Infrastructure and connectivity improve income distribution. Overall integration alongside the dimensions of trade and investment, money and finance, and institutional and social integration appear to significantly and robustly reduce poverty.

Keywords: composite index, economic growth, inequality, poverty, regional integration

JEL Classification: C38, C43, F15, O11

Suggested Citation

Park, Cyn-Young and Claveria, Racquel, Does Regional Integration Matter for Inclusive Growth? Evidence from the Multidimensional Regional Integration Index (October 19, 2018). Asian Development Bank Economics Working Paper Series No. 559 (October, 2018). Available at SSRN: https://ssrn.com/abstract=3339137 or http://dx.doi.org/10.2139/ssrn.3339137

Cyn-Young Park (Contact Author)

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
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Philippines
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HOME PAGE: http://www.adb.org

Racquel Claveria

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

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