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The Journal of Economic Integration 2024 September;39(3) :557-589.
DOI: https://doi.org/10.11130/jei.2024029
Regional Integration and Economic Development: Optimal or Messy Networks?

Gaspare M. Genna1 Zining Yang2 Mark Abdollahian3

1The University of Texas at El Paso, Texas, USA
2Cal Poly Pomona, California, USA
3Claremont Graduate University, California, USA
Corresponding Author: Gaspare M. Genna ,Email: ggenna@utep.edu
Copyright ©2024 The Journal of Economic Integration
ABSTRACT
States join regional integration organizations (RIOs) hoping that membership will boost economic development. Such cooperation should improve the efficiency of economic factors via firm competition, which will promote development. We argue that economic growth is difficult to produce when states form overlapping memberships and join RIOs with economies of similar size and similar levels of development. While joining an RIO may be beneficial, many overlapping memberships tend to involve larger costs through added obligations, leading to low economic performance. Integrating with similarly sized economies is not as beneficial as integrating with larger, relatively wealthier partners. We support our hypotheses using 180 states from 1962-2014. Using social network and time-series analysis, we find that joining multiple RIOs tends to decrease GDP per capita growth. However, the effect is not uniform: the negative effect is stronger in lesser-developed countries and does not hold when RIO membership includes a large economic partner.

JEL Classification
F120:
F130:
F140:
F150:
F550:
F630:
Keywords: comparative regional integration | economic performance | asymmetric power | developing economies | social network analysis | time series regression
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