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Regional Integration Clusters and Optimum Customs Unions: A Machine-Learning Approach

Author

Listed:
  • De Lombaerde, Philippe

    (Neoma Business School, United Nations University Institute on Comparative Regional Integration Studies)

  • Naeher, Dominik

    (University College Dublin)

  • Saber, Takfarinas

    (Dublin City University)

Abstract

This study proposes a new method to evaluate the composition of regional arrangements focused on increasing intraregional trade and economic integration. In contrast to previous studies that take the country composition of these arrangements as given, our method uses a network clustering algorithm adapted from the machine-learning literature to identify, in a data-driven way, those groups of neighboring countries that are most integrated with each other. Using the obtained landscape of regional integration clusters (RICs) as a benchmark, we then apply our method to critically assess the composition of real-world customs unions (CUs). Our results indicate a considerable variation across CUs in terms of their distance to the RICs emerging from the clustering algorithm. This suggests that some CUs are relatively more driven by “natural” economic forces, as opposed to political considerations. Our results also point to several testable hypotheses related to the geopolitical configuration of CUs.

Suggested Citation

  • De Lombaerde, Philippe & Naeher, Dominik & Saber, Takfarinas, 2021. "Regional Integration Clusters and Optimum Customs Unions: A Machine-Learning Approach," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 36(2), pages 262-281.
  • Handle: RePEc:ris:integr:0827
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    Cited by:

    1. Takfarinas Saber & Dominik Naeher & Philippe Lombaerde, 2023. "On the Optimal Size and Composition of Customs Unions: An Evolutionary Approach," Computational Economics, Springer;Society for Computational Economics, vol. 62(4), pages 1457-1479, December.
    2. Dominik Naeher & Philippe Lombaerde & Takfarinas Saber, 2025. "Evaluating accession decisions in customs unions: a dynamic machine learning approach," International Economics and Economic Policy, Springer, vol. 22(1), pages 1-27, February.

    More about this item

    Keywords

    Regional Integration; Customs Union; Machine Learning;
    All these keywords.

    JEL classification:

    • C60 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • F60 - International Economics - - Economic Impacts of Globalization - - - General

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