ABSTRACT
A frequently mentioned but little explored issue in the debates on regional economic integration is the consequences of North Atlantic economic blocs for outsiders, especially the developing economies. The weight of the evidence and the balance of the arguments by pro-and anti-regionalists suggest that there is precious little reason for the developing countries as a group to be alarmed about adverse trade effects of preferential trade arrangements. The general drift toward free trade within regional blocs and managed trade without must, therefore, be understood against the backdrop of these and related developments in the world economy. Whether regional economic blocs will become, in Jagdish Bhagwati's metaphor, building blocks for, or stumbling blocks against, free trade is still a debatable issue. Ironically, the porous national borders and the phenomenal expansion of the informal economy have created in much of Africa a non-legal regional integration of the most "advanced" type, though involving high transactions costs.
