The research for this project is funded by a grant from the Canada Council, whose support is gratefully acknowledged. Useful comments and suggestions for revision of earlier versions of this paper were offered by Lynn Mytelka, Robert Keohane, and anonymous reviewers for International Organization. An earlier version of the paper was presented at the Caribbean Studies Association, St. Lucia W.I., January 1976.

¹ There is a vast literature on this subject. Some of the best known works include Kitamura, Hiroshi, “Economic Theory and the Integration of Underdeveloped Regions,” in Latin American Economic Integration, Wionczek, Miguel S., ed. (New York: Praeger, 1966), pp. 42–63Google Scholar; Lipsey, R.G., “The Theory of Customs Unions: A General Survey,” Economic Journal, Vol. 70 (September 1960): 40–46CrossRefGoogle Scholar; Linder, S.B., “Customs Unions and Economic Development,” in Latin American Economic Integration, pp. 32–41Google Scholar; Balassa, Bela, Economic Development and Integration (Mexico: Grafica Panamericana, 1965)Google Scholar. One of the most comprehensive surveys is Kahnert, F. et al. , Economic Integration Among Developing Countries (Paris: OECD, 1969)Google Scholar. See also Sakamoto, Jorge, “Industrial Development and Integration of Underdeveloped Countries,” Journal of Common Market Studies, Vol. 7 (June 1969): 283–304CrossRefGoogle Scholar; Mikesell, Raymond F., “The Theory of Common Markets as Applied to Regional Arrangements Among Developing Countries,” in International Trade Theory in a Developing WorldGoogle Scholar; Roy Harrod and Douglas Hague, eds. (New York: St. Martins' Press, 1963), pp. 205–29; Jaber, Tayseer, “The Relevance of Traditional Integration Theory to Less Developed Countries,” Journal of Common Market Studies, Vol. 9 (March 1971): 254–67CrossRefGoogle Scholar; Bhambri, R.S., “Customs Unions and Underdeveloped Countries,” Economia Internazionale, Vol. 15 (05 1962): 237–44Google Scholar; Andic, Fuat, Andic, Suphan, and Dosser, Douglas, A Theory of Economic Integration for Developing Countries (London: Allen and Unwin, 1971)Google Scholar; Hans-Jurgen, , Harborth, , “La Transferencia de los modelos de integración,” Revista de la integración, Vol. 14 (Setiembre 1973): 7–14.Google Scholar

² See Kitamura, in Latin American Economic Integration, p. 54.Google Scholar

³ Demas, William G., The Economics of Development in Small Countries with Special Reference to the Caribbean (Montreal: McGill University Press, 1965), p. 87Google Scholar. Lipsey, R.B., “The Theory of Customs Unions: Trade Diversion and Welfare,” Economica, New Series 24 (02 1957): 41Google Scholar. Yu-Min, Chou, “Economic Integration in Less Developed Countries,” Journal of Development Studies (07 1971): 354.Google Scholar

⁴ Lipsey, , “The Theory of Customs Unions”; Demas, p. 88Google Scholar; Balassa, , Economic Development and Integration, p. 67.Google Scholar

⁵ R.S., Bhambri, “Customs Unions and Underdeveloped Countries,” p. 245Google Scholar. Fuat Andic, Suphan Andic and Douglas Dosser, p. 16.

⁶ Cooper, C.A. and Massell, B., “Toward a General Theory of Customs Unions for Developing Countries,” The Journal of Political Economy, Vol. 73 (1965): 475. Demas, p. 88.CrossRefGoogle Scholar

⁷ Andic et al., pp. 17–26. Kahnert et al., p. 17. The case for a customs union simply based on the “infant industry” argument is made by Brown, A.J., “Economic Separatism Versus a Common Market in Developing Countries,” Yorkshire Bulletin of Economic and Social Research (May 1961): 33.Google Scholar

⁸ Linder, p. 39.

⁹ Cf. Raymond F. Mikesell, p. 209. The impact of integration as an export stimulus is examined by Pearson, Charles, “Evaluating Integration among Less Developed Countries,” Journal of Common Market Studies, Vol. 8 (03 1970): 262–75.CrossRefGoogle Scholar

¹⁰ Kahnert et al., p. 27. Mikesell, p. 227. Demas, p. 89. Kitamura, p. 54.

¹¹ Kahnert et al., pp. 26, 42–43.

¹² Dell, Sidney, Trade Blocs and Common Markets (New York: Knopf, 1963), p. 213.Google Scholar

¹³ See Kitamura, p. 51. Demas, p. 32.

¹⁴ Kitamura, p. 50. Demas, p. 36.

¹⁵ On this point cf. Bodenheimer, Susanne, “Dependency and Imperialism: The Roots of Latin American Underdevelopment,” in Readings in U.S. Imperialism, Fann, K.T. and Hodges, Donald C., eds. (Boston: Porter Sargent, 1971), p. 167Google Scholar. And Girvan, Norman, “The Development of Dependency Economics in the Caribbean and Latin America: Review and Comparison,” Social and Economic Studies, Vol. 22 (03 1973): 6–12Google Scholar. Also, Frank, André Gunder, “Latin American Economic Integration,” in Latin America: Underdevelopment or Revolution, André Gunder Frank, ed. (New York: Monthly Review Press, 1969), pp. 175–80.Google Scholar

¹⁶ The concept of spread and backwash effects is usually attributed to Myrdal, Gunnar, Economic Theory and Underdeveloped Regions (London: 1957)Google Scholar. See also Balassa, , Economic Development and Integration, p. 123.Google Scholar

¹⁷ Mikesell, p. 222.

¹⁸ Demas, p. 90.

¹⁹ Elkan, P.G., “How to Beat Backwash: The Case for Customs-Drawback Unions,” Economic Journal, Vol. 75 (1965): 47.CrossRefGoogle Scholar

²⁰ See Kahnert et al., pp. 25–26, 46. Bhambri, pp. 253–54, 256. Little, I.M.D., “Regional Integration Companies as an Approach to Economic Integration,” Journal of Common Market Studies, Vol. 5 (12 1966): 181.CrossRefGoogle Scholar

²¹ Mytelka, Lynn K., “Transnational Relations and Regulation at the Regional Level: The Andean Pact,” unpublished research proposal, Ottawa, 1974Google Scholar. Mytelka, Lynn K., “Regional Integration in the Third World. Some Internal Factors,” in International Dimensions of Regional Integration in the Third World. Proceedings of the 5th International Conference of the ICI (Ottawa: University of Ottawa Press, 1975), pp. 15–39Google Scholar. Mytelka, Lynn K., “Regional Integration, Dependence, and Development,” paper presented at Queen's University (Kingston, Ontario, 01 23–25, 1976).Google Scholar

²² This relationship is elaborated in W. Andrew Axline and Lynn K. Mytelka, “Dependence and Regional Integration: A Comparison of the Andean Group and CARICOM,” paper presented at the annual meeting of the International Studies Association, Toronto, Ontario, February 25–29, 1976.

²³ Philippe Schmitter is one of the first theorists to include the actor strategies of member countries as an important dependent variable in the process of regional integration. “A Revised Theory of Regional Integration,” International Organization (Autumn 1970): 844–46.Google Scholar

²⁴ Ibid., also Schmitter, Philippe, “Central American Integration: Spill-Over, Spill-Around, or Encapsulation?” Journal of Common Market Studies, Vol. 9 (1970): 1–48CrossRefGoogle Scholar. Aaron Segal lists four conditions necessary for the success of integration schemes among underdeveloped countries: 1) They must offer economic benefits to each unit, including an agreement on the distribution of benefits. 2) They must not threaten existing beneficial relationships or they must replace them with new ones. 3) They must not constrain the policy of nation-building. 4) They must not threaten the bases of support of existing national political elites. “The Integration of Developing Countries: Some thoughts on Africa and Central America,” Journal of Common Market Studies, Vol. 2 (June 1967): 263.

²⁵ Haskel, Barbara, “Disparities, Strategies, and Opportunity Costs: The Example of Scan dinavian Economic Market Negotiations,” International Studies Quarterly, Vol. 18 (03 1974): 3–30CrossRefGoogle Scholar; Mytelka, Lynn K., ”Fiscal Politics and Regional Redistribution: Bargaining Strategies in Asymmetrical Integrative Systems,” Journal of Conflict Resolution, Vol. 19 (03 1975): 138–60.CrossRefGoogle Scholar

²⁶ Haskel, p. 6.

²⁷ It is interesting to note that the fundamental emphasis of liberal economics and the neo-classical approach to integration is on continued economic expansion where everybody gains from increasing the size of the pie, and little attention is paid to distribution of income. Development economics, on the other hand, starts with a major concern with the distribution of wealth on a global scale and ways to achieve a more equitable distribution. On the distribution of benefits see Robson, Peter, Current Problems of Economic Integration: Fiscal Compensation and the Distribution of Benefits in Economic Groupings of Developing Countries. (New York: United Nations, 1971)Google Scholar, TD/B/322/Rev. 1. Cf. also Janka, Helmut, “Distribución de costos y beneficios en sistemos de integración. Algunas anotacines,” Revista de la Integración, Vol. 17 (09 1974): 33–53Google Scholar. Also Lizano, Eduardo, “La distribución de beneficios y costos de la integración económica. Un procedimiento alternative,” Revista de la Integración, Vol. 15 (Enero 1974): 7–26.Google Scholar

²⁸ On this point cf. Susanne Bodenheimer, “Dependency and Imperialism: The Roots of Latin American Underdevelopment.” See also Norman Girvan, “The Development of Dependency Economics in the Caribbean and Latin America: Review and Comparison.” Also, see, Frank, André Gunder, “Latin American Economic Integration,” in Latin America: Underdevelopment or Revolution, Frank, André Gunder, ed. (New York: Monthly Review Press, 1969).Google Scholar

²⁹ See, for example, Thomas, Clive Y., “Neo-Colonialism and Caribbean Integration,” Ratoon (Discussion journal of the left) (04 1975): 1–28.Google Scholar

³⁰ This is relevant particularly to certain raw materials operations, especially mining. It is also true, however, for many other areas of multinational corporate activities, such as tourism, which has very high import input and few local linkages, enclave industries for export, and even some production for the local market, where it fails to produce backward or forward linkages due to being vertically integrated with other subsidiaries.

³¹ On coalitions in integrative systems see Mytelka, Lynn K., “The Salience of Gains in Third World Integrative Systems,” World Politics, Vol. 25 (01 1973): 235–50.CrossRefGoogle Scholar

³² Nye, Joseph S. Jr, “Patterns and Catalysts in Regional Integration,” International Organization, Vol. 19 (Autumn 1965): 870–84CrossRefGoogle Scholar, Schmitter, Philippe C., “Central American Integration: Spill-Over, Spill-Around, or Encapsulation?,” pp. 1–48Google Scholar. For a critique of the neo-functionalist approach in this context see Wiltshire, Rosina, Regional Integration and Conflict in the Commonwealth Caribbean, unpublished Ph. D. Dissertation, University of Michigan, 1974, pp. 3–9Google Scholar. Cf. also Schmitter, Philippe, “A Revised Theory of Regional Integration,” pp. 836–68Google Scholar. In particular see also Haas, Ernst B. and Schmitter, Philippe C., “Economics and Differential Patterns of Political Integration,” in International Political Communities: An Anthology (Garden City, N.Y.: Doubleday, 1966), pp. 259–99Google Scholar; Segal, Aaron, The Politics of Caribbean Economic Integration (Puerto Rico: Institute of Caribbean Studies, 1968)Google Scholar; Haas, Ernst, “The ‘Uniting of Europe’ and the Uniting of Latin America,” Journal of Common Market Studies, Vol. 2 (06 1967): 315–43CrossRefGoogle Scholar; Aaron Segal, “The Integration of Developing Countries: Some Thoughts on East Africa and Central America,” ibid: 252–82; Hansen, Roger D., “Regional Integration: Reflections on a Decade of Theoretical Efforts,” World Politics, Vol. 21 (01 1969): 242–71.CrossRefGoogle Scholar

³³ Kahnert et al., remark that there appears to be no example of an integrative scheme moving from a free trade area to a customs union (p. 41). Philippe Schmitter does assert the presence of an expansionist logic in the CACM, although it is not based on the same factors as in Europe. “Central American Integration,” p. 39.