The Economics of Regional Integration

• Title: The Economics of Regional Integration
• Authors: Sándor Gyula, Full Professor at the Department of World Economy at Corvinus University of Budapest, alongside;Judit Burucs, Antal Ertl, Denis Ivanov, Ferenc Kollárik, Emília Lakos, Anikó Magasházi, Nokulunga Mbona, Michel Navarro, Nwabisa Florence Ndzama, María José Sánchez, Barnabás Szabó, Oleg Tankovsky, Mabore Thema, Timothy Yaw Acheampong
• Published by: Routledge, Taylor and Francis Group, 2025
• Where to find it: https://www.taylorfrancis.com/books/edit/10.4324/9781003506423/economics-regional-integration-s%C3%A1ndor-gyula-nagy

The term “global citizens” is one used to describe those whose professional lives and personal pursuits and motivations extend beyond the confines of their geography. And we are far more global today than we have ever been before. In many ways the world is getting smaller, as people work from multiple locales, their companies operate across multiple continents and are governed and responsive to the ways in which overseas markets operate.

Indeed, these days, much of the world operates as a global neighbourhood, with countries seeking to maintain good relationships with those that live next door or over the road. From the Neighbourhood Watch equivalents of the European Union to the lending-a-garden-shovel equivalent of trade partnerships. And, of course, there is always the need to maintain a polite relationship with those neighbours that rub everyone the wrong way.

But how can we actually measure whether our neighbourly regional partnerships are working? It’s one thing for countries to sign agreements and create organisations, but it’s entirely another to figure out if they’re actually making life better for their citizens or if they’re just expensive bureaucratic exercises. This is something Sándor Gyula Nagy, Full Professor at the Department of World Economy at Corvinus University of Budapest has been interested in. Along with his co-authors he’s explored the realities of international ties and agreements in his latest book: The Economics of Regional Integration.

The authors have created what’s essentially a report card system for regional integration – a way to score how well different regions are doing at working together economically. They’ve applied this framework to ten different regional partnerships across four continents, providing an effective global analysis on which routes and arrangements work and which do not.

This particularly relevant today as we’re living through a time of major economic shifts. From countries moving out of multi-country arrangements (such at Brexit) debating whether they’re better off going it alone or partnering with their neighbours, and others seeking to join, to the to the growing number of trade wars as shifting political perspectives reset the rules on how we work with others.

Going beyond the agreements themselves, the authors get to the heart of the matter, whether these regional partnerships actually benefit society, helping to improve lives, reduce inequality and poverty. When countries work together, do the benefits trickle down to ordinary people, or do they just help big corporations and wealthy elites?

Why should this be essential reading? The authors believe the practical implications are significant. As policymakers grapple with making decisions about which regional organisations to join, or which neighbour to partner up with, having a systematic way to measure success rather than just relying on political rhetoric could help make these decisions more evidence-based and ultimately more beneficial for everyone involved.

We sat down with co-author Sándor Gyula Nagy to find out more.

Can you tell us about the inspiration behind your new book? What motivated you to write it?

It has been a long journey from the idea of this book to its completion. As a doctoral student, I started my research career with the guidance and mentorship of the Jean Monnet Award-winner professor Tibor Palánkai in 2003. I first started teaching seminars the same year on his undergraduate course Economics of European Integration at Budapest University of Economics (now Corvinus University of Budapest) based on his textbooks. I had the honour to participate in several of his research projects, where we analysed the integration maturity and the socio-economic transition process of Hungary and other Central-Eastern European countries before and after their accession to the European Union (EU). In September 2022, after the pandemic and the normalisation of teaching, I had the chance to take over a related doctoral course from Tibor at the Doctoral School of International Relations and Political Sciences of Corvinus.

I was lucky to meet a great and enthusiastic group of doctoral students. I presented to them the idea of creating a comparative analysis of regional integrations based on Professor Palánkai’s methodology for a publication. We invited Professor Palánkai to the first related class and asked him for guidance. He said, “My hypothesis (for years and decades) has been that participating in a regional integration is much better for any country than staying outside. Prove me wrong!” We could not say no to this challenge.

What are the key takeaways or main ideas that readers can expect to find in your book?

The book seeks to explore the impact of regional integration on the socioeconomic development of the member states over three decades. The main argument of the book states that regional integration is associated with socioeconomic development and institutional capacity of member states along with their integration maturity. The book enables a deeper and more detailed understanding of complex economic issues, supporting more informed policymaking and decision-making. Moreover, the composite index model facilitates a comparative analysis of regional integration across different global contexts by employing a consistent methodological framework and structure. The resulting findings may serve as reference points for future economic or interdisciplinary research endeavours seeking to develop and apply corresponding composite indices

Who is the target audience for your book, and how do you believe it will benefit them?

The book could be an interesting literature throughout the academia and universities where European studies or (comparative/international) political economy are taught (inside and outside of the EU). Furthermore, researchers and analysts of think tanks, research institutes, and international organisations handling European affairs and developments in world economy would benefit from reading the book as well.

The whole teaching of “integration” is mostly focused on the EU, which is widely taught in higher education throughout the EU, the Candidate Countries, and in other regions. In some universities,  they give a more general overview of global and regional integration. The non-European regional integrations (with the partial exception of, ASEAN, MERCOSUR and NAFTA) are rather neglected topics in the academia. The book bases on existing knowledge, and gives a new angle and methodology to measure and compare the effect of regional integrations.

What do you think makes this topic particularly relevant or timely in today’s business world, or for the years ahead?

The rapidly changing world and the ill-considered political decisions of some leading world powers seem to override economic principles and integration trends of the past decades (e.g. the introduction of unilateral punitive tariffs inside the USMCA). However these wild political (and economic) waves can also help the development and cooperation of some regional integrations (e.g. ASEAN-EU or EU-MERCOSUR cooperation). Exploring the good and not so good practices of the past decades through ten different case studies can even point the way for policy- and decision-makers on how to make regional integration successful.

Can you discuss any specific case studies or real-world examples from your book that illustrate its principles in action?

During the ten case studies of the book, we cover four continents and three decades of regional integration. We identify good practices in every continent which, however, varies in time. The EU is the only integration which is increasing constantly in our newly developed complex indicator over three decades and showing real convergence of GDP during this time period. Other successful integrations are NAFTA/USMCSA ( between 1994-2008), ASEAN and MERCOSUR from 2003, and SACU from 2006 onwards.

How does your book add to/expand existing discussions on this topic?

The book shows the importance of regional (economic) integrations in the world economy, based partially on descriptive analyses and partially on a new methodological framework based on a new composite index of integration profile.

The value added of the book is to make a comparison of regional integrations based on the same methodological framework and structure including countries focusing on four specific regions: the Americas, EU, Africa, and Asia.

Regarding the Americas, the big question of development is the path dependency. The state-of-the-art research argues that during the early 2000s the region entered a new age; meanwhile, even before the COVID-crisis, it has become obvious that external factors behind the scenes and the dependency on them is far from over. We will analyse the integration profile of countries involved in major American integrations (NAFTA/USMCA, MERCOSUR, Andean Community, Pacific Alliance), while the focus is on the economic, social and institutional capacity and integration maturity of the countries to integrate on regional (and/or global) level. We will examine the reasons behind the failures or success of the political-economic integration of the region, and whether the regional integrations played any role at all.

In the case of European countries, the integration profile methodology was already developed and tried for the V4, which we expanded on through the composite index to the whole EU and the Western Balkans. In Asia, the case studies are ASEAN (Association of Southeast Asian Nations) and Eurasian Economic Union. In Africa, we concentrate on South African Customs Union and East African Community.

Finally, what book written by another author would you consider essential reading for your audience and why?

These are the basic readings to understand the process of integration and why some countries are succesfull or unsuccesful in general terms with economic and social development. Institutions do matter…

• Acemoglu, D. & Robinson, J.A. (2012). Why Nations Fail. Crown Business. 546 p.
• Baldwin, R., & Wyplosz, C. (2020). The Economics of European Integration. London, United Kingdom: McGraw-Hill
• Benczes, I. (Ed.). (2024). Economic policies of populist leaders: A Central and Eastern European Perspective. London, UK & New York, NY: Routledge.
• De Grauwe, P. (2018). Economics of Monetary Union (12th ed). Oxford, United Kingdom: Oxford University Press, 289 p.

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