“Natural” economic blocs: an alternative formulation

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Abstract
This article offers an alternative to what has become a conventional definition of “natural” regional grouping. Instead of focusing on the total value of intraregional trade or its share in the region's total trade, it focuses on the pattern of trade prior to integration. It formulates a method for assessing the degree to which joining a regional bloc would distort the ranking of a country's industries by comparative advantage. A “natural” grouping is one that would largely preserve the comparative advantage of the constituent countries. It occurs if each of the constituent countries’ exports to the world as a whole has a commodity mix similar to its exports to the integrating region.