The Problems of the Quantitative Estimation of Integration Effects

Abstract

It is a common finding in economics that the development of the theory on a particular topic and the development of empirical research have pursued rather different courses. It is, however, difficult to think of a better example of this divergence than the study of the effects of economic integration. Not only that, but while one can discuss the theory of economic integration as if it were a unified body of ideas it too has two rather separate strands. On the one hand there is what can be described as customs union theory developing through the work of Viner (1950), Meade (1955), Lipsey (1957), Johnson (1965) and many others while on the other there are the works of Balassa (1962), inter alia, and El-Agraa (1980), developing aspects of integration beyond those purely relating to trade. In the previous chapter this second category of integration effects is described under the heading of ‘economic union’. The relative development of the theory in its two parts is reflected in the balance of that chapter where by far the larger part is devoted to customs unions. Yet as El-Agraa makes clear the two aspects ‘must be considered simultaneously’ (his italics).