After ten years, the Mercosur seems to be the most successful integration process in Latin America. However, its development remains imperfect due to asymmetric situations between the countries. Brazil is the regional industrial block and the integration process would lead his partners to become captive markets and to see their domestic industrial production decrease.In order to analyze the possibility of such scenario, we adopt a New Economic Geography modelwith three regions and asymmetries. Its serves as a support to numerical simulations of trade liberalization in Mercosur. We show a redeployment of industrial activities from Brazil to Argentina, witch has the best differential of productivity, and may appear to be the new regional industrial block in the end of integration process. An empirical verification is donewith a Grubel-Lloyd indicator upon trade flows within Mercosur. It confirms largely theconclusions of the theoretical model. (Full text in French)
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Paper provided by Centre d'Economie du Développement de l'Université Montesquieu Bordeaux IV in its series Documents de travail with number
54.
Length: 33 pages Date of creation: Jan 2001 Date of revision: Handle: RePEc:mon:ceddtr:54
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Find related papers by JEL classification: F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies F15 - International Economics - - Trade - - - Economic Integration F22 - International Economics - - International Factor Movements and International Business - - - International Migration O54 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean R13 - Urban, Rural, and Regional Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
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