Latin America's Intraregional Trade: Evolution and Future Prospects

Sebastian Edwards, Miguel Savastano

NBER Working Paper No. 2738 (Also Reprint No. r1594)
Issued in October 1988
NBER Program(s):International Trade and Investment, International Finance and Macroeconomics

This paper analyzes in detail the evolution of Latin America's international trade patterns, focusing on intraregional trade and on the formal attempts made to create free trade zones or custom unions. In particular, we assess the role of intraregional trade in the structural adjustment required by the Latin American debt crisis. The data analyzed show that the success of the commercial integration process has been quite limited. They also show that there has been no significant change in the DECO countries' share in Latin American imports or in the volume of intraregional trade flows since the early 1970s. Furthermore, the nature of the adjustment to the debt crisis of the 1980s indicate that Latin American markets possess a rather limited capacity to absorb a substantial increase in regional exports in the current context. Thus, we conclude that the success of the required expansion in Latin American exports will depend more on the region's ability to design innovative mechanisms to penetrate the markets of industrialized countries than on the deepening of any regional trade integration process.

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Document Object Identifier (DOI): 10.3386/w2738

Published: Economic Aspects of Regional Trading Arrangements, edited by D. Greenaway, T. Hyclak, and R. Thornton, pp. 188-233. New York: New York University Press, 1989.

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