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Regional Integration in Latin America

Author

Listed:
  • Maria E. de Boyrie

    (Department of Finance, MSC 3FIN, College of Business, P.O. BOX 30001, New Mexico State University, Las Cruces, NM 88003, USA)

  • Mordechai Kreinin

    (Department of Economics, 110 Marshall-Adams Hall, Michigan State University, East Lansing, MI 48824, USA)

Abstract

This paper assesses the welfare effects of integration in Latin America. It estimates trade creation and diversion of: 1) integration of the four Mercosur countries (Brazil, Argentina, Paraguay and Uruguay) and 2) amalgamation of Mercosur with the Andean group (Bolivia, Colombia, Ecuador and Peru). The method used to proxy trade creation is the change in total imports of a country from before to after integration, while trade diversion is proxied by the change in the country’s external imports between the two periods. A “control country” approach is used to hold constant the effects on imports of factors other than integration, such as income and price changes. With some exceptions Latin American integration was found beneficial to welfare in that trade creation exceeded trade diversion.

Suggested Citation

  • Maria E. de Boyrie & Mordechai Kreinin, 2016. "Regional Integration in Latin America," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 16(2), pages 293-311, June.
    • Handle: RePEc:wsi:gejxxx:v:16:y:2016:i:02:n:gej-2015-0066
    DOI: 10.1515/GEJ-2015-0066
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    References listed on IDEAS

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    1. Pedro E. Moncarz & Marcel Vaillant, 2007. "MERCOSUR’s role on the regional patterns of imports of its country members: a dynamic panel data approach," Discussion Papers 07/27, University of Nottingham, GEP.
    2. Mordechai E. Kreinin, 1981. "Static Effect Of E. C. Enlargement On Trade Flows In Manufactured Products," Kyklos, Wiley Blackwell, vol. 34(1), pages 60-71, February.
    3. Muhammad, Andrew & Meade, Birgit Gisela Saager & Regmi, Anita & Seale, James L., 2011. "International Evidence on Food Consumption Patterns: An Update Using 2005 International Comparison Program Data," Technical Bulletins 120252, United States Department of Agriculture, Economic Research Service.
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    More about this item

    Keywords

    trade creation; trade diversion; control country approach; Mercosur; regional integration; Latin America;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F15 - International Economics - - Trade - - - Economic Integration

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