Unit 8: Trade Blocs and Regional Integration
Introduction
NAFTA and the EU are just the latest regional trade (and monetary) blocs to emerge in a liberalizing world. Such trade blocs aren't necessarily accounted for in our basic theory of free trade, since such regional economies often form unions with other members to keep non-member imports out or restricted. Critics of such unions point out that the gains from such trade blocs are not well shared among consumers and workers or between the rich and developing countries. What are the historical circumstances that account for the formation of these blocs? What is the theory behind them? What have been their effects?
