Regionalization: An In‐Depth Global Update

ABSTRACT Departing from regional datasets of annual GDP per capita growth from 131 economies, we analyze the status and evolution of regionalization from 1971 to 2021. First, we test the existence of regional business cycles with a dynamic factor model. Then, with impulse response functions, we simulate regional shocks, which is a novel approach to evaluate regionalization. We show that regionalization has consolidated in Europe with an East–West divide; in Asia, it has experienced a significant positive leap, and in America, it seems stagnant, but countries appear to exhibit increasingly similar responses to regional shocks. Africa and the Middle East show the nonexistence of regional business cycles, which is indicative of the underachievement in regional integration and convergence.