This chapter portrays the current status of Arab economic co-operation. The chapter assesses some of the major factors which govern the effectiveness of Arab economic co-operation and explain its present limitations. It analyses the potential gains from a closer and more effective Arab economic co-operation. The chapter examines briefly some of the implications of an assumed close Arab economic co-operation to the world economy. Economic integration reflects an advanced stage of economic co-operation where individual countries have agreed to give up their sovereignty over certain important economic policy issues in favour of the joint sovereignty of the group. In contrast with the trade field, Arab multilateral co-operation at the level of payments has been almost non-existent. The dramatic growth in the financial resources at the disposal of the Arab petroleum-exporting countries has had an important impact on the efforts to achieve Arab economic co-operation.