In the early postwar period, economic integration among developing countries was considered primarily as a way of extending the policy of import substitution on a regional scale. This approach is subject to serious limitations since even regional markets will often not permit the establishment of efficient-size firms, much less competition among several such firms. Thus, regional integration oriented towards import substitution may lead to the establishment of inefficient plants and of an inefficient industrial structure, thereby postponing the time -- and increasing the difficulties -- of a reorientation of policies once the limits of import substitution have been reached.
A different approach is taken in this paper. Economic integration will be considered as one of the policy options available to developing countries and as part of their overall strategy for economic development. Broadly speaking, there are four possible policy options that may be adopted singly or in combination: development in a national framework, regional economic integration, increased trade with developing countries in other regions, and participation in the international division of labour.____________________