LITERATURE REVIEW

LITERATURE REVIEW

The relationship between RIAs and globalization has been studied from different
perspectives throughout the literature. While Jacob Viner’s (1950) work on the Customs
Union was the first attempt of theorizing the welfare effects of RIAs, the following studies
like Lipsey (1960), Cooper and Massell (1965) were extensions of the Vinerian analysis

.
These studies significantly contributed to the development of this analysis. In the late
1980s, with the introduction of the New Trade Theory, several studies like Krugman
(1991) and Frankel et al. (1996) included new factors like economies of scale and product
differentiation in order to model regional economic integration. The 1990s, on the other
hand, witnessed the emergence of studies that emphasized the effects of regionalism on the
future multilateral trading system, like the ‘dynamic analysis’ of regional integration,
Bhagwati (1993). In a similar vein, the studies on  the political economy stance like Levy
(1994), Grossman and Helpman (1995) and Krishna (1998) provided significant insights
about RIAs and their effects on multilateral tariff liberalization.

Since there is a growing literature in regionalism debate, this chapter tries to survey some
of these studies through categorizing them into three subsections. The first section will
present a brief summary of selected studies that contributed to the theoretical development
of regionalism. The second section will try to enlist some of the literature that focused on
the relationship between regional economic integration and multilateral tariff liberalization,
and on the effects of regional integration on multilateral free trade. The final section, on
the other hand, will survey the literature studying the effects of regional economic
integration on member and non member countries.  


                                                
1
 Although classical economists like A.Smith (1776), Ricardo (1817) and McCulloch (1832) had mentioned
about trade diverting effects of of preferential commercial treaties, theory of economic integration dates back
to the 1940s that include the studies of de Beers (1941), Tinbergen (1945), Byé (1950) (Robson, 2000, p.8).
The study of Balassa (1961), on the other hand, was the first for the systematic analysis of this theory (cited
in Halıcıoğlu, 1996, p.4).