POLITICAL AND ECONOMIC-FACTORS IN REGIONAL ECONOMIC-INTEGRATION

We examine countries' decisions to join each other in regional integra tion schemes as the result of economic and political costs and benefit s. We use a probit model of this decision to examine the wave of regio nal integration of the late 1950s and early 1960s. The results of this exercise reveal that quality of political relations, openness, countr y size, and proximity significantly influence the decision of two coun tries to integrate. The model predicts the formation of the EC, LAFTA and CACM but not that of the EFTA. Moreover, the model does not predic t the formation of any other integration schemes in this period.