Globalization and regionalization are the two major developments of the post-war world economy. Globalization refers to trade liberalization (e.g. through the General Agreement of Tariffs and Trade (GATT)) and increasing capital mobility on a worldwide scale. Regionalization characterizes the formation of regional groups of countries with liberalized internal trade and factor mobility, i.e., regional integration. The past three decades have seen a growing number of regional integration blocs1 including more and more countries with an increasing degree of integration. The most prominent examples are the European Union (EU) and the North American Free Trade Association (NAFTA). There are a large number of regional integration blocs in the developing world with a wide variety of integration levels, including the Association of South-East Asian Nations (ASEAN), the Carribean Community (CARICOM) and the Economic Community of West African States (ECOWAS), to name just a few.
KeywordsEuropean Union Trade Liberalization Regional Integration Custom Union Factor Endowment
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