It is commonly suggested that integration is good for poverty by increasing trade and investment and creating jobs. The number of regional trade agreements has grown quickly in recent years, and this may have been partly spurred by the EU, which is deemed to be a successful model of economic and social integration.
There is little research on the effect of regional integration on development and poverty in poor countries. A study by the Overseas Development Institute (ODI) attempts to fill this void by looking at the scope and effects of different types of regional integration. This research sought to look at how integration affects poverty in poor countries by analysing (1) the current research literature, (2) the effects of regional integration on Foreign Direct Investment in developing countries (FDI), and (3) how regional integration specifically effects poverty in Bolivia and Tanzania.
Researchers found that integration does raise FDI, but the benefits were found to be spread unequally with the larger countries capturing the majority of the direct benefits. In Tanzania and Bolivia it was found that capacity constraints limited the ability of these countries to benefit fully from new trade and investment. There is also the risk that by focussing on regional integration processes the incentive for countries to engage in multilateral engagement, or simply working in concert, is removed. This is important because it is possible that for some countries multilateral alignments provide more potential for development than regional integration.
Nevertheless, regional groupings provide a firm focus to problems affecting their specific region. This can play an import role in providing appropriate regional public goods and appropriate adjustment towards the liberalisation of sensitive market and service sectors.
It is likely that the current financial crisis is going to impact upon different regions around the world in different ways. It has been argued that the crisis is likely to hasten the structural shift in global economic power from the Western countries to the emerging economies, and as a result regional understandings and the processes that form regional integration strategies will change.
In January the 11th Annual Global Development Conference will take place in Prague. This is organised by the Global Development Network (GDN) and will look critically at regional integration in the light of the financial crisis. Three key questions the conference hope to address include:
- Will political pressures to push back globalization now come from the West?
- If so, how can developing countries counter it?
- Is a new variant of globalization likely to emerge from this crisis, and if so, what will its contours be?
The full ODI research report can be found on R4D through the following link: Regional Integration and Poverty

DFID
According to a DFID funded report by the