The Theory of Economic Integration


This book finds its origin in my long-standing interest in problems of economic integration in Europe. I soon realized that a discussion of present-day integration projects, in Europe or elsewhere, would bear little fruit without considering the theoretical issues involved. At the same time, a perusal of recent writings on the customs union issue has shown that -- following the time-honored tradition of international trade theory -- these contributions concentrated on problems of resource allocation in a static framework and paid little attention to the dynamic effects of integration. Yet the economic consequences of a fusion of national markets can be but imperfectly explained under static assumptions, since in the European area, and especially in Latin America, the impact of integration on economic growth assumes great importance.

These considerations induced me to focus my attention on the theoretical problems in the integration of independent national economies, and to endeavor to present a unified theory of economic integration that would include, over and above the received theory, the dynamic aspects of economic integration, and would bring together the theoretical problems involved in co-ordinating economic policies in a union. In the course of the discussion, distinction will also be made between various forms of integration, such as a free trade area, customs union, common market, economic union, and total integration. In addition, at various points of the argument, the theoretical principles will be applied to present-day integration projects, such as the European Common Market and Free Trade Association, and the proposed Latin American unions.

The book is designed for economists, but I assume that the non- professional reader with interest in international problems will also find it useful. He will want to skim certain sections that require greater familiarity with economic theory. The selected bibliography is designed to assist the reader in further study and research.

I am heavily indebted to Gottfried Haberler and Harry G. Johnson whose comments and criticism not only helped to remove several errors and obscurities in the argument but also stimulated the re-

Additional information

Publisher: Place of publication:
  • Homewood, IL
Publication year:
  • 1961


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