Regional economic groupings are now found in all areas of the developing world and involve about half of all developing countries. There are two main reasons underlying this drive toward integration—the first, economic; the second, political. First, economic integration may become an important instrument for economic growth of the region as a whole. Removing barriers to the free movement of goods, labor, and capital between regions sometimes leads to the expansion of trade and, therefore, of incomes and employment. Larger economic units, with their larger markets, should permit economies of scale in production and justify the establishment of enterprises previously considered too costly. If permitted, resources such as labor and capital may move freely to the most productive areas of these larger markets and add to the growth of output. Depending on geography, cheaper and more efficient transportation systems may result. Finally, the broader markets resulting from integration should attract more substantial foreign investment. The second motive for establishing regional economic groupings is to strengthen collective self-reliance and thereby reinforce the political independence of developing countries, enhance their power vis-á-vis the developed world, and enlarge their economic and political role in international relations.
Inevitably there are problems confronting developing countries attempting integration. Political rivalries, nationalism, difficulties connected with differences in the level of development reached by member countries, and the tendency of benefits to be concentrated in particular areas, leading to disparities in the development of members—all these factors can thwart moves toward integration and cooperation. This article reviews one attempt at regional integration—the East African Community (EAC).