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GTAP Resources: Resource Display

GTAP Resource #3085

"MERCOSUR: treatment of asymmetries and economic growth"
by Terra, Maria Ines


Abstract
Although MERCOSUR is an integration agreement between countries that show strong asymmetries between them, only recently this issue has been recognized as one of the most serious impediments to move forward towards deeper integration. Decisions taken by the MERCOSUR have been oriented to providing the small economies with more time to adjust to the programmed levels of Common External Tariff (CET) and create funds (FOCEM) to help development and competitiveness in the small economies. The aim of this paper is to evaluate the effects of integration policies and of some policies to attend asymmetries on economic growth of small MERCOSUR partners using a dynamic multi country CGE model (Mercenier and Yeldan, 1996). I simulated a basic scenario with exogenous growth of population. Then, I assumed three scenarios of integration: MERCOSUR continues as an imperfect Custom Union (CU); MERCOSUR becomes a perfect CU where all exceptions to CET and Free Trade within the region are eliminated; and the exceptions are not removed and it is admitted that the small countries sign Free Trade Agreements with developed countries. Finally, I study the impact of three policies adopted by MERCOSUR to attend asymmetries. First, I assumed that Brazil and Argentina remove all restrictions to trade within the region and all the exceptions to the CET immediately but the small countries do that in ten years. The second and third scenarios assume that MERCOSUR implements the FOCEM to attend asymmetries according with the decisions adopted by the Counsel. The paper concludes that the single increase of the population leads to a fast growth of Paraguay and slow growth of Uruguay. GDP per capita goes down in the two countries, especially in Paraguay, which is the country with lower income per capita of the MERCOSUR. Then, I can expect that if there are no changes in policies or other exogenous shocks the asymmetries in the MERCOSUR will tend to increase.


Resource Details (Export Citation) GTAP Keywords
Category: 2009 Conference Paper
Status: Published
By/In: Presented at the 12th Annual Conference on Global Economic Analysis, Santiago, Chile
Date: 2009
Version:
Created: Terra, M. (4/15/2009)
Updated: Terra, M. (4/15/2009)
Visits: 1,795
- Preferential trading arrangements
- South America


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