Economic Integration In Mercosur Essay

961 words - 4 pages

With the variety of counties’ needs, the lack of economy in some countries and the importance of trade, some countries made an agreement named by MERCOSUR to coordinate their economic policies to gain benefits which are not possible otherwise. The agreement was signed in March 1991, among the following countries: Argentina, Brazil, Paraguay and Uruguay which was updated in 1994. The agreement main aim is to promote the free-trade and ease the movement of goods and services as well as currency. The MERCOSUR organization is considered as the 4th largest economy in the world coming after EU, NFTA and Japan, with GDP of $ 2.895 billion. The MERCOSUR organization strengthens the economic ...view middle of the document...

In 2005, the MERCOSUR economies grew by 4% making a GDP of $9568 and total of $1002 billion contributed among the members as following: Paraguay $1323, Uruguay $4800, Brazil $4260 and $4762 in Argentina, exceeding all the expectations. The aim of MERCOSUR organization does not rotate only on trade; it goes further than that, whereby it aims also to decrease the unemployment rate by providing opportunity jobs benefiting from the intra-regional advantage, where the market-oriented policies have extended the potential to benefit from the economics of scale and provide new opportunities for intra-regional specialization which cannot be possible otherwise. With an increase of the MERCOSUR population over the last years, the labour supply has also increased, the increase made the MERCOSUR members to think about the agriculture sector and how to benefit from it because they do not give it the deserved attention. Despite the demand and supply of MERCOSUR as non-agricultural employment increased, it is still insufficient to meet the growth of labour supply, thus, the MERCOSUR made a trade agriculture agreement with Canada in an attempt to increase the demand and supply for agricultural sector. The liberalization of economy also has an impact on the regional integration, because in the past, the MERCOSUR was following the import substitution industrialization programs in order to develop their domestic industry, therefore they imposed high tariffs on importation in an attempt to protect them. The protection strategy was not successful strategy, where it led to weaken the competitiveness of the domestic market which caused to raise the public debt and the budget deficit which ended by economic crisis. In 1980, Argentina and Brazil shifted their policy from importing to exporting policy, thereafter Paraguay and Uruguay followed them in using the same strategy. The trade policy liberalization program affected the interests which are considered as one of the political costs of economic integration.
NFTA agreement:
With an increase of trade among the MERCOSUR members,...

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