Measuring Economic Integration in Developing Countries: The Case of Central America

Abstract

This article builds a composite index, the Central American Integration Index (IIC‐AMPI), to measure economic integration. This index utilises a robust methodology and conceptual framework. The study shows that IIC‐AMPI is responsive to variable changes and resistant to outliers. The findings indicate that the Deep Integration Process initiative dominates the current integration trend, as seen in the regional average score from 2015 to 2017, aligning with Guatemala and Honduras. Nicaragua demonstrates the most consistent progress, while Panama lags behind. The evidence supports the Customs Union as Central America's future integration path, highlighting the index's ability to capture the dynamic reality of economic integration.