Abstract:

The design of current regional economic organizations (REOs) is remarkably diverse. Some REOs address numerous economic issues, while others have only limited mandates. Some REOs have an independent bureaucracy and a legalized dispute settlement mechanism, while others do not. What determines this institutional variation? Extant research alludes to the possibility that the member-states’ economic growth, or lack thereof, affects the prospects of cooperation through regional institutions. The nature of these relationships is contested, however. Some studies suggest that economic stagnation compels governments to strengthen their regional institutions, but others indicate that hard times lead to decreasing enthusiasm and investment in such initiatives. Systematic empirical evidence on the link between economic growth and REOs’ functions and structure is nevertheless scant. Using an original data set that contains detailed information on the economic activities and institutional structure of numerous REOs over three decades, this chapter presents one of the first systematic analyses of these relationships. Our findings indicate that economic growth is conducive to greater REO institutionalization