Economic integration among less-developed countries

This study takes an overview of economic integration among less-developed countries (LDCs). The various forms of integration are reviewed along with their advantages and disadvantages. In the postwar period a growing number of LDCs have expressed interest to varying degrees in economic integration. It is a little known fact that most integration endeavours currently in existence are between LDCs. Even the three major developed country movements have LDC associate-members. Given this situation the question naturally arises as to what economic theory has to say about integration among LDCs. The theoretical body most commonly drawn upon for integration matters is static customs union theory. This theory has been employed on a number of occasions to argue that LDCs will not benefit from integration. It is found that this theory is seriously incomplete and that its conclusions are of questionable validity. Its direct application to LDCs is grossly inappropriate, and its conclusions may be seriously misleading. There is no single hard and fast body of theory for judging the LDC case. It is therefore necessary to draw from many different branches of theory including growth theory, regional economics, dynamics, etc., in order to derive some insight into the LDC case. Neither is economic integration a simple undertaking of quite limited dimensions. It can become incredibly complex. The benefits from economic integration can be substantial, but they are not automatic. Integration among LDCs requires considerably more than the dismantling of direct trade restraints between member-states if the endeavour is to have a reasonable chance for success. The benefits of integration can vary greatly from grouping to grouping, and for some integration may be a costly mistake. A weighted consideration of many factors should be undertaken before the integration decision is made. The nature of a large number of these factors is discussed in the study.