No doubt, imitating the EEC and EFTA, a beginning toward regional economic grouping of less developed countries (LDC) has been already made. The Central American Common Markert is historically the first of this kind. Then there is the union like the Latin American Free Trade Area (LAFTA).

Integration in Central America is formed by five countries, viz., Costal Rica, EI Salvador, Guatemala, Honduras and Nicaraguatln 1962, they drew up a very comprehensive document called the General Treaty of Central American Economic Integration. It aimed at the creation of a customs union with common external tariffs and the establishment of a free trade in all products originating in these five member-countries. Provision was also made for an economic tie-up.

A Central American Economic Integration Bank was constituted in 1961 to enable closer economic union by helping to finance agricultural, industrial and social overhead projects benefitting the member countries.

However, though, not much good has come out of this economic integration to these five Latin American countries due to their slow economic progress, primitive methods, lack of adequate communications, scarcities, etc., there has been development of a few efficient light industries. Due to competition and with financial help in the single regional market of these five countries, it is hoped to stimulate growth, which would not have been otherwise possible.

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On the other hand, due to wide optical and economic disparities among the nations of Latin America, LAFTA seems to have been lacking a smooth ground for forming an economic union. The member nations of LAFTA, nevertheless, share a common interest in protecting and expanding their trade and promoting their economic development. However, the rate of trade expansion in LAFTA has been rather very slow.

LAFTA was originally composed of seven countries, viz., Argentina, Brazil, Chile, Paraguay, Peru, Uruguay and Mexico. Colombia and Equador joined the group later on. LAFTA aims at the liberalisation of intra-Latin American trade, promotion of complementarity of industrial production and coordination bf agricultural development and trade. Despite the provision made by the Treaty of Montevideo for the formation of a common market, LAFTA has not yet achieved its main goal.

The major hindrances in its way are: the vested interests in national products – industrial as well as agricultural, the continuance of bilateral trading and payment arrangements by many members and distrust and uncertainty prevailing among the members of negotiating bodies. For instance, Bolivia refused to join LAFTA on the ground that such a step would impede its own development, as it is devised to mainly speed up the development, as it is devised to mainly speed up the development of only Mexico, Argentina and Brazil.

Similarly, various newly-independent African states like Kenya, Uganda and Tanzania had unsuccessfully tried to establish a customs union in the 1960s. Likewise, in 1964, Turkey, Iran and Pakistan also started the Regional Cooperation for Development (RDC) without making much headway, while the plan for the economic integration of the Arab League has remained only on paper for several years. Of course, among the Asian countries, Philippines, Malaya and Thailand are also dreaming of some sort of a regional grouping.