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Transport Costs and “Natural” Integration in Mercosur

Author

Listed:
  • 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.

Suggested Citation

  • Winters, L. Alan & Amjadi, Azita, 1999. "Transport Costs and “Natural” Integration in Mercosur," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 14, pages 497-521.
  • Handle: RePEc:ris:integr:0115
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    References listed on IDEAS

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    Cited by:

    1. repec:cml:incocp:2sp-9 is not listed on IDEAS
    2. L. Alan Winters, 2000. "Regionalism and Multilateralism in the Twenty-First Century," IDB Publications (Working Papers) 2188, Inter-American Development Bank.
    3. 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.
    4. 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 (IfW).
    5. Dunning John H. & Lundan Sarianna M. & Eckes Alfred E. & Bryant Sarah K. & Unger Michael L. & Shelburne Robert C. & Cernat Lucian, 2001. "Global Economy Quarterly, Issue 3," Global Economy Journal, De Gruyter, vol. 2(3), pages 1-109, December.
    6. Mauricio Mesquita Moreira, 2006. "IIRSA Economic Fundamentals," IDB Publications (Working Papers) 9201, Inter-American Development Bank.
    7. Lucian Cernat, 2001. "ASSESSING REGIONAL TRADE ARRANGEMENTS: ARE SOUTH–SOUTH RTAs MORE TRADE DIVERTING?," International Trade 0109001, EconWPA.
    8. Mauricio Mesquita Moreira, 2006. "IIRSA Economic Fundamentals," IDB Publications (Working Papers) 2415, Inter-American Development Bank.

    More about this item

    Keywords

    economic integration; transport costs; regional trade preferences;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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