“Convergence” or “Divergence”? —Rethinking Regional Integration of the Past Two Decades

Abstract

The European Union (EU), North American Free Trade Agreement (NAFTA) and Association of Southeast Asian Nations (ASEAN) are the three biggest regional economic cooperation organizations in the world. What roles have these three organizations played in both domestic development and the evolving global trend of regional integration? This paper investigates the inequality among these three organizations for regional economic cooperation based on cross-national parallel data from thirty-nine countries over the period 1989–2008. By using the Theil index decomposition, this paper finds that the interregional disparity is the main source of inequality. This paper also finds that intraregional disparity rose significantly from the mid-1990s. ASEAN contributes an equalizing force to the change, while NAFTA contributes a disequalizing force. From the empirical tests based on the Barro non-linear growth regression model, our results show that the whole sample and some subregional samples (ASEAN and EU) support the convergence hypothesis. ASEAN’s convergence speed is the fastest, which testifies to the fact that the convergence speed of the transition path is faster than the long-term path.

Keywords

regional integration / evolving inequality / β-convergence

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2016 Higher Education Press and Brill