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MERCOSUR enlargement: predicting the effects on trade in primary agricultural commodities

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  • Pascal Ghazalian

Abstract

This article estimates the effects of a hypothetical enlargement of the Mercado Común del Sur (MERCOSUR), depicted by granting MERCOSUR associate member countries a full membership status, on trade in primary agricultural commodities. The empirical investigation is implemented through the multiplicative form of the gravity model. The estimated gravity parameters are used to carry out scenarios that predict the effects of MERCOSUR enlargement on trade in primary agricultural commodities. The predictions reveal that MERCOSUR enlargement would generate significant increases in exports from the full members to the associate members. The predictions also show relatively smaller increases in exports from the associate members to the full members (in value terms), but some important increases in trade among the associate members. Trade diversion effects of MERCOSUR enlargement, which influence trade between full members and from non-member countries to full and associate members, are found to be limited. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • Pascal Ghazalian, 2013. "MERCOSUR enlargement: predicting the effects on trade in primary agricultural commodities," Economic Change and Restructuring, Springer, vol. 46(3), pages 277-297, August.
    • Handle: RePEc:kap:ecopln:v:46:y:2013:i:3:p:277-297
    DOI: 10.1007/s10644-012-9128-1
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    More about this item

    Keywords

    Agricultural commodities; Gravity equation; Latin America; MERCOSUR; Regional trade agreements; F13; F15; Q17; R19;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • R19 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Other

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