The following extended term paper will analyse MERCOSUR and examine whether it can be regarded as a successful example of regional integration. To do so, the paper will review the objectives set in the founding treaty, the Treaty of Asunción, and analyse whether they have been fully met. At a glance, the objectives of MERCOSUR were to “eliminate trade barriers, establish a common external tariff, coordinate macroeconomic policies and develop the harmonization of laws” (Arieti, 2006, p. 764). To fulfil these objectives, the development of MERCOSUR was supposed to go through three gradual stages: the first goal was to create a free trade area, this was to be followed by a customs union, and the third and final aim was the creation of a common market. These stages will be analysed to conclude if they have been reached. At the same time, the main achievements and challenges of MERCOSUR’s integration experience will be presented.
The limited scope of this term paper does not allow for an analysis of every aspect in great detail. Due to this, the main focus after the theoretical section will be on the area of trade and on the earlier stages of the agreement, as this is most important to establish the success of MERCOSUR as a regional trade agreement and thus highly relevant to find an answer to the research question.
In the era of globalisation, international markets have continued to grow in importance. Many regional economic integration agreements have been negotiated and created to improve competitiveness in global trade. One of these regional agreements is the ‘Mercado Común del Sur’ (MERCOSUR), in English ‘Common Market of the Southern Cone’, which was founded by Argentina, Brazil, Paraguay and Uruguay in 1991. Its creation was expected to mark an economic transition of the region as “the conditions for economic expansion were viewed as highly favourable” (ASEAN Studies Centre, 2009, p. 10). 2016 marks the 25th anniversary of MERCOSUR and the regional trade agreement has grown to a significant size over the past years. It is the largest integration agreement in Latin America and the Caribbean, the fourth largest in the world and the fifth biggest economy in the world (MERCOSUR, 2017b). It encompasses around 260 million citizens and had a combined GDP of more than 2.8 trillion USD in 2015 (Campbell, 2015).
Table of Contents
1. Introduction
2. Underlying Theoretical Concepts
2.1 Internationalisation and Globalisation
2.2 Regional Economic Integration
3. Introduction to MERCOSUR
3.1 Founding
3.2 Objectives
3.3 Structure
4. Developments
4.1 Trade
4.1.1 Internal Trade
4.1.2 External Trade
4.2 Economics
4.2.1 GDP Evolution
4.2.2 Monetary Developments
4.3 Democracy
5. Conclusion
Research Objectives and Topics
This paper aims to evaluate the development of MERCOSUR since its founding in 1991 to determine whether it can be considered a successful example of regional economic integration by analyzing its stated objectives against its actual performance.
- Theoretical foundations of internationalization and regional integration
- Institutional framework and objectives of the MERCOSUR agreement
- Analysis of intra-regional and extra-regional trade trends
- Assessment of economic indicators, including GDP evolution and monetary policies
- Evaluation of socio-political developments, specifically regarding the Ushuaia Protocol and democracy
Excerpt from the Book
3.1 Founding
The Common Market of the Southern Cone is a regional economic integration agreement in South America. It was founded on 26 March 1991 when the four WTO member countries Argentina, Brazil, Paraguay and Uruguay signed the Treaty of Asunción, which was modelled on the example of the European Union. Its official languages are Spanish and Portuguese. As the name already implies, MERCOSUR was set up to be a common market which represents the third stage of the regional economic integration steps introduced above. The intended stage of a common market was to be reached through a gradual development, first creating a free trade area, then reaching the stage of a customs union and finally evolving into a common market. This paper will analyse whether this stage has indeed been reached and how successful the implementation of its objectives has been.
The reasons behind the establishment of MERCOSUR were manifold and span the areas of economic development, social justice and environmental preservation. Against the background of the international trend towards economic integration, the participants wanted to secure and strengthen their positions in the global economy, while modernising their economies to keep up with technological and scientific developments (Treaty of Asunción, 1991).
Summary of Chapters
1. Introduction: Presents the background of MERCOSUR as a significant trade agreement and outlines the paper's aim to analyze its success against its founding objectives.
2. Underlying Theoretical Concepts: Defines the concepts of internationalization, globalization, and the stages of regional economic integration to provide a framework for the analysis.
3. Introduction to MERCOSUR: Details the founding, primary objectives, and institutional structure of the agreement as established by the Treaty of Asunción.
4. Developments: Analyzes the performance of MERCOSUR across five development phases, focusing on trade patterns, economic growth, and progress in democratic cooperation.
5. Conclusion: Summarizes the evaluation of MERCOSUR, concluding that it has fallen short of being a full common market and is better defined as an imperfect customs union.
Keywords
MERCOSUR, Regional Integration, Common Market, Trade Liberalisation, Treaty of Asunción, Economic Development, Globalisation, Internal Trade, Customs Union, GDP Evolution, Monetary Policy, Democracy, Ushuaia Protocol, FOCEM, South America
Frequently Asked Questions
What is the primary subject of this academic paper?
The paper evaluates whether MERCOSUR (the Common Market of the Southern Cone) has fulfilled its founding objectives after 25 years and assesses its success as a regional integration project.
What are the core thematic areas covered in the text?
The text focuses on trade integration, economic performance, the institutional framework of the agreement, and socio-political commitments to democracy.
What is the central research question?
The research question asks whether MERCOSUR can be regarded as a successful example of regional integration based on the achievement of its initial goals.
Which scientific methodology is applied here?
The author uses a qualitative analysis approach, reviewing the founding treaties, historical development phases, and trade/economic data to evaluate the bloc's progress.
What topics are discussed in the main section of the paper?
The main section covers the theoretical definitions of integration, the founding and structure of MERCOSUR, its five development phases, and deep dives into trade, GDP, and democratic governance.
How is the paper characterized by its keywords?
The paper is defined by terms related to economic policy, international agreements, and the specific historical and political context of South American regionalism.
Why did MERCOSUR decide against a single common currency?
The agreement decided against it due to the lack of political will to create the necessary fiscal and monetary coordination apparatus and the concern that a currency union would not equalize productivity levels.
What role does the FOCEM fund play in the agreement?
FOCEM is the structural convergence fund intended to reduce asymmetries between member states, promote social cohesion, and support the development of lesser-developed regions within the bloc.
How is the Ushuaia Protocol significant to the agreement?
The protocol serves as a legal framework to safeguard democracy, allowing for the suspension of member states that experience a rupture of the democratic order, as seen with Paraguay and Venezuela.
What is the author's final conclusion regarding MERCOSUR's success?
The author concludes that MERCOSUR has not reached the stage of a common market and is better characterized as an imperfect customs union, falling short of its original ambitious expectations.
- Quote paper
- Sabrina Schleimer (Author), 2017, 25 Years of MERCOSUR. A successful Example of Regional Integration?, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/369458
