CIAO DATE: 06/05

The Political Economy of Regionalism: Current Theorizing and Preliminary Observations on the G-3 FTA

Abstract

This working paper provides and overview of current theorizing on the political economy of regional integration. Specifically, it assesses several theories that attempt to explain the causes behind the resurgence or regionalism in the late 1980's and early 1990's with special emphasis on Milner's demand-driven theory based on demands for regionalism by firms with internal increasing returns to scale. After reviewing the main propositions of the theories in light of the G-3 Free Trade Agreement, it finds that no single theory adequately accounts for the causes behind the establishment of the agreement, that Milner's model is better at specifying preferences than outcomes, and that greater attention should be paid to the institutional forms of regional integration agreements.

Full Text (PDF, 41 pages, 2.15 MB)