The New Wave of Regionalism

Economic regionalism appears to be growing rapidly. Why this has occurred and what bearing it will have on the global economy are issues that have generated considerable interest and disagreement. Some observers fear that regional economic institutions—such as the European Union (EU), the North American Free Trade Agreement (NAFTA), Mercosur, and the organization of Asia-Pacific Economic Cooperation (APEC)—will erode the multilateral system that has guided economic relations since the end of World War II, promoting protectionism and conflict. Others argue that regional institutions will foster economic openness and bolster the multilateral system. This debate has stimulated a large and influential body of research by economists on regionalism's welfare implications.

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