Mercosur
MERCOSUR – a POSSIBLE DOWNFALL IN THE ROAD OF A PROMISING FUTURE?
Fall 2012
This paper will be taking a deep look into how Mercosur affected its member countries when it was first created and what the consequences were to take them to where they are now.
Introduction:
This paper will take a deep look into a trade agreement created in March 1991 between Argentina, Brazil, Paraguay, and Uruguay, called Mercosur (Mercado Común del Sur, or Southern Common Market). After understanding what a trade agreement is and what are the benefits and disadvantages of being part of one, I will analyze how the agreement changed the economy and overall welfare of the countries involved and how did their interactions changed ever since. Not only will the countries that are part of the agreement be analyzed, but also neighboring countries, which are not part of the agreement, that could have had their own trading environment affected. I will show how the agreement was first created and what the reasons for it to be developed were. Mercosur has contributed significantly to regional trade liberalization, what provides huge incentives to grow in the past. But by encouraging trade within the group at the expense of trade with nonmembers, Mercosur may limit member countries’ access to high-technology imports, an important stimulus to growth. And I will show data to support this argument. By the end of this paper I should be able to conclude, are the countries involved into Mercosur in fact better off by adopting the trade policies established and by being part of the agreement? Or would they be better off now if they had not engaged into Mercosur at all?
How it was created:
Mercosur was established in March 1991, formalized in the Treaty of Asuncion, and countries members were Argentina, Brazil, Paraguay, and Uruguay. These four countries had been engaged in multilateral trade liberalization for three years before making the agreement. The treaty called for the
Fall 2012
This paper will be taking a deep look into how Mercosur affected its member countries when it was first created and what the consequences were to take them to where they are now.
Introduction:
This paper will take a deep look into a trade agreement created in March 1991 between Argentina, Brazil, Paraguay, and Uruguay, called Mercosur (Mercado Común del Sur, or Southern Common Market). After understanding what a trade agreement is and what are the benefits and disadvantages of being part of one, I will analyze how the agreement changed the economy and overall welfare of the countries involved and how did their interactions changed ever since. Not only will the countries that are part of the agreement be analyzed, but also neighboring countries, which are not part of the agreement, that could have had their own trading environment affected. I will show how the agreement was first created and what the reasons for it to be developed were. Mercosur has contributed significantly to regional trade liberalization, what provides huge incentives to grow in the past. But by encouraging trade within the group at the expense of trade with nonmembers, Mercosur may limit member countries’ access to high-technology imports, an important stimulus to growth. And I will show data to support this argument. By the end of this paper I should be able to conclude, are the countries involved into Mercosur in fact better off by adopting the trade policies established and by being part of the agreement? Or would they be better off now if they had not engaged into Mercosur at all?
How it was created:
Mercosur was established in March 1991, formalized in the Treaty of Asuncion, and countries members were Argentina, Brazil, Paraguay, and Uruguay. These four countries had been engaged in multilateral trade liberalization for three years before making the agreement. The treaty called for the
Cited: Connolly, M. (1999, May 1). Mercosur: Implications for growth in member countries. Retrieved from http://www.calstatela.edu/faculty/rcastil/ECON465/Connolly.pdf Leipziger, D., Frishtak, C., Kharas, H., & Normand, J. (1997). Mercosur: Introduction and industrial policy. Blackwell Publishers Ltd. Retrieved from http://siteresources.worldbank.org/INTPREMNET/Resources/Mercosur.pdf Mercosur rip?. (2012, Jul 14). Retrieved from http://www.economist.com/node/21558609 Ruggiero, R. (2007, June 16). Mercosur heads of state summit, paraguay. Retrieved from http://www.wto.org/english/news_e/sprr_e/mercos_e.htm Laird, S. (1997, May 23). Mercosur: Objectives and achievements. Retrieved from http://www.wto.org/ENGLISH/res_e/reser_e/ptpr9702.pdf