Assessing the Impact of Regional Integration: Do regional trade institutions shape trade patterns?

Economic interdependence plays a major role in most theories of regional integration: As precondition, and as outcome of regional integration. For Europe, the nexus between interdependence and integration is almost taken as given. However, for other integration projects, empirical analyses are scarce. The paper analyzes the relation between regional integration institutions and economic interdependence applying diachronic network analysis to five regional integration projects: the EC/EU, NAFTA, MERCOSUR, ASEAN and SADC. The development of economic interdependence patterns is compared to elucidate the impact of regional integration on interdependence. The main result is that regional integration projects comprising countries of the North exhibit a significant amount of interregional interdependence. Regional integration projects of the South are much more oriented towards partners in the North. Interregional interdependence in the South emerges only very seldom, and is very susceptible to external shocks. Thus, to account for regional integration projects in the South, one should study their effect on interregionalism, i.e. their relationships to external partners in the Northern hemisphere.