Why are regional and economic grouping formed?

Answer Regional and economic grouping is one of the major instrument of promoting international trade activities among countries. It focuses on creation of larger economic unit from smaller national economies. Regional and economic groupings such as the SAARC, European Union, ASEAN, G-8, G-20, etc are formed to increase economic cooperation among nations in the neighbourhood or those sharing common economic interests.
This is particularly considered essential by developing countries as they are all facing competition not only from developed nations but also amongst themselves in the relatively limited economic space enjoyed by the developing world. Besides, cooperation with other economies in our neighbourhood is also required, as all major common economic activities in the region have an impact on overall human development in a shared environment.