Chapter 6 A South American Perspective: Regional Versus Global Trade Patterns

This study presents evidence of increasing regionalization of international trade among 10 South American countries from 1980 to 2001. 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, the Andean Community and Mercosur. There is also evidence of border erosion in the continent, especially among the Mercosur members. These results emerge from 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.