Connecting the Dots: A Road Map for Better Integration in Latin America and the Caribbean

Mesquita Moreira, Mauricio and Blyde, Juan and Giordano, Paolo and Rodriguez Chatruc, Marisol and Li, Kun and Harris, Jeremy and Lucenti, Krista (2018): Connecting the Dots: A Road Map for Better Integration in Latin America and the Caribbean. Published in:

Abstract

What can be said of Latin America and the Caribbean's experiment with regional integration? Did it live up to the expectations? What does this experience say about the regional integration agenda moving forward? Do the tectonic changes undergone by the world economy in the last quarter of a century matter for policy design? This report offers answers to these pressing questions. It argues that while the "new regionalism" was in general effective to promote international trade, it failed to boost the region's competitiveness abroad. Fragmentation is seen as the original sin, and convergence the path to redemption. The policy recommendations offer different routes to convergence, from a cautious, cumulation of rules or origin approach to a non-stop sprint to a LAC-FTA. But they all come with a warning: in the current challenging trade environment, the benefits of caution might be too little, too late.

• Item Type: MPRA Paper
• Language: English
• Keywords: Regional Integration, Latin America, Trade
• Subjects: F - International Economics > F1 - Trade > F15 - Economic Integration; F - International Economics > F6 - Economic Impacts of Globalization; F - International Economics > F6 - Economic Impacts of Globalization > F63 - Economic Development

References

Anderson, J.E., and E. Van Wincoop. 2003. “Gravity with Gravitas: A Solution to the Border Puzzle.” American Economic Review 93(1): 170–192.

Anderson, J.E., and Y.V. Yotov. 2012. “Gold Standard Gravity.” NBER Working Paper 17835, February. National Bureau of Economic Research.

Anderson, J.E., and Y.V. Yotov. 2016. “Terms of Trade and Global Efficiency Effects of Free Trade Agreements, 1990–2002.” Journal of International Economics 99: 279–298.

Baier, S.L., Y. Yotov, and T. Zylkin. 2016. “On the Widely Differing Effects of Free Trade Agreements: Lessons from Twenty Years of Trade Integration.” CESifo Working Paper Series No. 6174. Munich: CESifo Group.

Bown, C.P., D. Lederman, S. Pienknagura, and R. Robertson. 2017. Mejores vecinos: hacia una renovación de la integración económica en América Latina. Washington, DC: World Bank.

Braga, H., H. Kume, and L.C. Ferro. 1988. “Proteção Efetiva no Brasil: Uma Estimativa a Partir de Comparações de Preços.” Sério épico no. 13. Rio de Janeiro: IPEA/INPES.

Castaño, F. and F.J. Piñero. 2016. “La política automotriz del MERCOSUR (PAM): evolución y actualidad. El eje Argentina-Brasil y su impacto sobre el bloque subregional.” Paper presented at the VIII Congreso de Relaciones Internacionales del Instituto de Relaciones Internacionales de la Universidad Nacional de La Plata (IRI-UNLP). La Plata, Argentina, November.

Cipollina M., D. Laborde and L. Salvatici. 2013. “Do Preferential Trade Policies (Actually) Increase Exports? An Analysis of EU Trade Policies.” Paper presented at the Agricultural and Applied Economics Association’s 2013 AAEA and CAES Joint Annual Meeting, Washington, DC, August 4–6, 2013.

Cirera, X., F. Foliano, and M. Gasiorek. 2016. “The Impact of Preferences on Developing Countries’ Exports to the European Union: Bilateral Gravity Modelling at the Product Level.” Empirical Economics 50(1): 59–102.

Dai, M., Y.V. Yotov and T. Zylkin. 2014. “On the Trade-Diversion Effects of Free Trade Agreements.” Economics Letters 122(2): 321–325.

Feenstra, R.C., R.E. Lipsey, H. Deng, A.C. Ma and H. Mo. 2005. “World Trade Flows: 1962-2000.” NBER Working Paper no. 11040. National Bureau of Economic Research.

Freund, C. 2010. “Third-Country Effects of Regional Trade Agreements.” World Economy 33(11): 1589–1605.

Galiani, S. and P. Sanguinetti. 2003. “The Impact of Trade Liberalization on Wage Inequality: Evidence from Argentina.” Journal of Development Economics 72: 497–513.

Inter-American Development Bank. 2017. “Informe Mercosur No 22.” Buenos Aires: INTAL, Inter-American Development Bank

Kohl, T., S. Brakman and H. Garretsen. 2016. “Do Trade Agreements Stimulate International Trade Differently? Evidence from 296 Trade Agreements.” World Economy 39(1): 97–131.

Larch, M., J. Wanner, Y.V. Yotov, and T. Zylkin. 2017. “The Currency Union Effect: A PPML Re-assessment with High-Dimensional Fixed Effects.” Drexel University School of Economics Working Paper 2017-07.

Limão, N. 2016. “Preferential Trade Agreements”. In Kyle Bagwell and Robert W. Staiger (eds.) Handbook of Commercial Policy Volume 1, Part B. Elsevier.

Limão, N., and G. Maggi. 2015. “Uncertainty and Trade Agreements.” American Economic Journal: Microeconomics 7(4): 1–42.

Mesquita Moreira, M., and P. G. Correa. 1998. “A First Look at the Impacts of Trade Liberalization on Brazilian Manufacturing Industry.” World Development 26(10): 1859–1874.

Powell, A. 2017. "2017 Latin American and Caribbean Macroeconomic Report." Washington, DC: Inter-American Development Bank.

Santos Silva, J.M.C., and S. Tenreyro. 2006. “The Log of Gravity.” The Review of Economics and Statistics 88(4): 641-658.

Soloaga, I., and A. Winters. 2001. “Regionalism in the nineties: What effect on trade?” North American Journal of Economics and Finance 12: 1–29.