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Transport Costs and “Natural” Integration in Mercosur

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Author Info

  • Winters, L. Alan

    ()
    (University of Sussex)

  • Amjadi, Azita

    (The World Bank)

Abstract

The paper explores the argument that trade between the Mercosur countries should be stimulated by preferential policies because of their geographic proximi - ty. That is, that the Mercosur countries are candidates for “natural” integration. The paper finds that, on average, transportation margins on trade within Merco - sur and between Mercosur and Chile are about 6 percentage points lower than on trade with the rest of the world. That is a significant margin, and one that was reflected in the countries’ trade patterns even before regional trade agree - ments reduced the policy-based barriers to mutual trade. But it is probably not large enough, in and of itself (without other benefits), to make the introduction of trade preferences desirable. The paper also explores the argument that absolutely high transportation costs between Mercosur and the rest of the world (that is, not relative to intra-Mercosur costs) justify regional trade preferences. For this to apply the introduction of trade preferences must cause the Mercosur countries to cease importing some goods from the rest of the world completely. While Mer - cosur--- rest-of-the-world transport costs certainly are high, trade patterns sug - gest that very few goods will cease to be imported from the rest of the world.

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Bibliographic Info

Article provided by Center for Economic Integration, Sejong University in its journal Journal of Economic Integration.

Volume (Year): 14 (1999)
Issue (Month): ()
Pages: 497-521

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Handle: RePEc:ris:integr:0115

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Web page: http://econo.sejong.ac.kr/
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Related research

Keywords: economic integration; transport costs; regional trade preferences;

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Cited by:
  1. Pacheco, Ricardo & Nunnenkamp, Peter, 1997. "Wirtschaftliche Integration auf Kosten peripherer Regionen? Chancen und Risiken für den brasilianischen Nordosten im Mercosur," Kiel Working Papers 827, Kiel Institute for the World Economy.
  2. 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.
  3. Lucian Cernat, 2001. "ASSESSING REGIONAL TRADE ARRANGEMENTS: ARE SOUTH–SOUTH RTAs MORE TRADE DIVERTING?," International Trade 0109001, EconWPA.
  4. Mauricio Mesquita Moreira, 2006. "IIRSA Economic Fundamentals," IDB Publications 9201, Inter-American Development Bank.

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