According to the European Commission (1990), closer integration leads to less frequent asymmetric shocks and to more synchronized business cycles between countries. However, for Krugman (1993) closer integration implies higher specialization and, thus, higher risks of idiosyncratic shocks....

This paper creates a new index ("index of bilateral trade relation") to quantitatively evaluate the degree of regional economic integration based on countries' de facto bilateral trade relations. It concludes that a fundamental arrangement of East Asian regionalism should involve at least one of...