This dissertation studies economic integration as a method of coping with risks associated with the trading world. There are two basic stratagems: defensive and preventative. The defensive approach treats the problem as an insurance proposition while the preventative approach treats it as self-protection. The former dominates the literature and deals mainly with security issues associated with the Cold War. With the fall of the Berlin Wall, attention has shifted toward preventative treatments.; Here, the preventative approach is adopted to develop the position that loss prevention leads to some form of cooperation. The dissertation is composed of three chapters. Chapter 2 presents a basic model of integration for a country faced with uncertainties in international trade. It examines how changes in the underlying parameters of the economy affect the degree of integration. Special attention is paid to demonstrate how the presence of hegemony and the development of institutions influences the country's decision to integrate. Multilateralism and regionalism are concluded to be complements.; Three case studies illustrate the basic theme developed in Chapter 2 and explores the reasons for success or failure in the East African Community (Kenya, Tanzania, Uganda), the Southern African Development Community (centered around South Africa), and Mercosur (Argentina, Brazil, Paraguay and Uruguay).; Finally, Chapter 4 uses empirical evidence to examine the question “What characteristics contribute to the probability of joining an economic union?” A probit analysis in a discrete choice framework is applied. It is concluded that international institutional development contributes to the overall probability that a country joins a regional integration arrangement. Chapter 5 concludes.
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