Chapter 4: Integration in Latin America – Trends and Challenges
* Renato Baumann 4.1 INTRODUCTION Regional trade agreements have had a significant presence in the design of international and productive policies in Latin American and Caribbean countries since the early 1950s. Fifty years later, the region has not reached the degree of economic inter-relation found, for instance, in Western Europe, but the concern with promoting regional integration has been a tradition in an impressive number of speeches and declarations by policymakers in the last decades. The emphasis in regional agreements as a policy tool has changed quite significantly over time, with a recent boom from the mid-1980s to mid1990s, but at present this has been challenged by a number of features of the international scenario. The weakening of multilateral negotiations and the multiplicity of bilateral agreements with countries in other regions might affect regional trade both via trade diversion and through investment decisions, considering a larger time horizon. International capital movement might affect exchange rates and output growth, hence influencing trade. At the same time the need for new, broader negotiating agenda, from simply dealing with trade issues to taking into consideration topics not directly related to trade but rather to competition, labour standards, environmental issues and others increase the difficulties in designing integration strategies. Even more so if the group of countries that aim at integrating their economies present markedly different characteristics. There are at present more challenges than ever to the integration processes in the region. The point made here is that regional integration is not something automatically desirable...
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