Why do countries form regions? The political economy of regional integration

To understand the reasons for the formation of regional economic groupings two basic concepts are introduced: association and dissociation. Moreover, the importance of interest groups and strategic groups is discussed, and security and bargaining power as basic political motivations are evaluated. The paper also analyses some political economy arguments regarding the determinants of the size of economic groupings and the dynamics of their development through different stages. Finally it considers regional groupings as strategical coalitions with a deep impact on the future of the world economy.