Regional integration among developing countries is a subject which has recently struck the headlines. The Mercosur agreement linking Argentina, Brazil, Paraguay and Uruguay into a customs union, as well as the decision earlier this year by the ASEAN countries to proceed to the establishment of a full free-trade area, have drawn renewed attention to a process which is in fact almost as old as the multilateral trading system itself. Developing countries have been tempted to go into regional integration since the 1950s. In Latin America, under the influence of the prevailing economic philosophy of the time, regional economic integration was seen as a means of achieving economic independence from the North by applying import substitution policies to larger markets. The idea was that larger markets could attract investment, provide opportunities for specialization, reduce unemployment and at the same time reduce the participating countries' dependence on foreign inputs and foreign markets. It other parts of the world, mainly Africa, the same philosophy inspired regional integration but to it was added the desire to establish structures independent of the former colonial masters.

Regional integration among developing countries is a subject which has recently struck the headlines. The Mercosur agreement linking Argentina, Brazil, Paraguay and Uruguay into a customs union, as well as the decision earlier this year by the ASEAN countries to proceed to the establishment of a full free-trade area, have drawn renewed attention to a process which is in fact almost as old as the multilateral trading system itself. Developing countries have been tempted to go into regional integration since the 1950s. In Latin America, under the influence of the prevailing economic philosophy of the time, regional economic integration was seen as a means of achieving economic independence from the North by applying import substitution policies to larger markets. The idea was that larger markets could attract investment, provide opportunities for specialization, reduce unemployment and at the same time reduce the participating countries' dependence on foreign inputs and foreign markets. It other parts of the world, mainly Africa, the same philosophy inspired regional integration but to it was added the desire to establish structures independent of the former colonial masters.