International Economic Integration

Moves towards the creation of a single market within the European Community and the apparent development of a North American trade block have brought issues of global economic restructuring to the fore. The traditional theory of economic integration, from an international standpoint, seems inadequate for explaining these developments. International Economic Integration begins by describing this traditional theory and analysing its explanatory power. It argues that whilst traditional theory offers useful insights it would be of value to update it by introducing arguments from the new theory of trade and strategic industrial policy. The neo-classical theory no longer seems sufficient to explain patterns of international trade, since it fails to take account of market imperfections. Some of these, it is argued, can be corrected by economic policy although this in no way gives an unconditional mandate for protectionism, which might set off a destructive cycle of retaliation and counter-retaliation. Various forms of integration are considered,including customs, examples are European because of the longer history offered by the EC.
The theoretical framework is valid for the range of developed and developing countries. A number of examples from North America, Eastern Europe and the developing world are also explored.