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A South American Perspective: Regional versus Global Trade Patterns

Author

Listed:
  • Diego Agudelo

    (EAFIT University)

  • Galia Julieta Benitez
  • Larry Davidson

    (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)

Abstract

This study presents evidence of the increasing regionalization of the international trade of ten South American countries from 1980 to 2001. We found that the regionalization of trade in South America is best described as an increasing trade among Spanish-speaking countries and increasing trade within the two regional agreements: Andean Community and Mercosur. We also find evidence of border erosion in the continent, especially among the Mercosur members. These results are evident in a simple statistical analysis and are also economically significant when tested in a consistent gravity equation that controls for a set of macroeconomic and geographic variables.

Suggested Citation

  • Diego Agudelo & Galia Julieta Benitez & Larry Davidson, 2006. "A South American Perspective: Regional versus Global Trade Patterns," Working Papers 2006-16, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
  • Handle: RePEc:iuk:wpaper:2006-16
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    File URL: http://kelley.iu.edu/riharbau/RePEc/iuk/wpaper/bepp2006-16-agudelo-benitez-davidson.pdf
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    References listed on IDEAS

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    1. Wise Carol, 1999. "Latin American Trade Strategy at Century's End," Business and Politics, De Gruyter, vol. 1(2), pages 117-202, August.
    2. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    3. Andrew K. Rose, 2004. "Do We Really Know That the WTO Increases Trade?," American Economic Review, American Economic Association, vol. 94(1), pages 98-114, March.
    4. Soloaga, Isidro & Alan Wintersb, L., 2001. "Regionalism in the nineties: what effect on trade?," The North American Journal of Economics and Finance, Elsevier, vol. 12(1), pages 1-29, March.
    5. Diego Agudelo & Larry Davidson, 2006. "The Gravity of Globalization," Working Papers 2006-15, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    6. Heinz G. Preusse, 2004. "The New American Regionalism," Books, Edward Elgar Publishing, number 3271, June.
    7. Andrew K. Rose & Eric van Wincoop, 2001. "National Money as a Barrier to International Trade: The Real Case for Currency Union," American Economic Review, American Economic Association, vol. 91(2), pages 386-390, May.
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    Cited by:

    1. Cortes, Maria, 2007. "Composition of Trade between Australia and Latin America: Gravity Model," Economics Working Papers wp07-19, School of Economics, University of Wollongong, NSW, Australia.

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