A Case Study of Effects of Developing Country Integration on Trade Flows: The Andean Pact

Abstract

Cooperation among developing countries in the form of economic integration has received increased attention as a development strategy. About one-half of all developing countries currently participate in integration schemes.1 Yet there have been few attempts to measure the effects on trade flows associated with these integration efforts.2 The scarcity of such studies stems from a dissatisfaction on the part of some investigators regarding the applicability to developing countries of evaluative criteria formulated by Viner to assess world-wide allocative gains from industrial nation integration schemes.3 A lack of interest in the traditional method of evaluating integration efforts is also motivated by the expectation that static gains will be small or nonexistent in developing country integration schemes, where even collectively markets are often small and members display little differences in relative factor endowments.