Open regionalism in the Andean Community: a trade flow analysis 1
This article evaluates the extent to which the establishment of the Andean Free Trade Zone (AFTZ) has led to an improvement of intra-regional trade, as promised by open regionalism, without reducing extra-regional trade. Open regionalism is a dynamic process in which economic agreements serve as intermediate steps towards integration with the world economy. The calculations of ex post income elasticities of import demand show that the establishment of the AFTZ in 1993 led to an increase in Andean Community trade, and not to a contraction of extra-regional trade. The intensity of trade index and the propensity to export intra- and extra-regionally confirm this finding. The article discusses these results in the context of the multilateral trading system and the trade relations between the Andean Community and the rest of the world.
c1 Columbia University and Tulane University, 500 West 120th. Street, Rm 450, New York, NY 10027. Tel.: 212-939-7025. Fax: 212-666-0140. Email: [email protected]
1 I am grateful to the editor Richard Blackhurst and an anonymous referee for their many valuable comments. I also thank Clark W. Reynolds, Kwan S. Kim, John M. Trapani, Paul Spindt, Ernest Bartell, Amitava Dutt, Jaime Ros, Reinhardt Wettmann, Francisco Thoumi, Rob Vos, Sebastian Edwards, Gerardo Otero, Brian Potter, Ximena Sosa-Buchholz, Eric Baklanoff, as well as participants in the 2002 Southeastern Council on Latin American Studies meeting, the 1999 Business Association of Latin American Studies Conference, the team of the project ‘Andean Integration and Economic Liberalization’ from Stanford University, US–AID and Friedrich Elbert Foundation – ILDIS, the participants of the Center of Latin American Studies at Stanford University workshop, the Kellogg Institute at University of Notre Dame workshop, the Latin American Faculty of Social Sciences (FLACSO) workshop, and the Training Network on Agricultural Policies (REDCAPA – FAO) workshop for their helpful comments on previous and partial versions of this paper. I also thank the institutional support of Tulane University, the United Nations Development Programme, the United Nations Department of Economic and Social Development, USAID, the Board of Regents of the State of Lousiana, and my research assistants, María Augusta Torres and Hemant Bajaj. I am grateful to John Breitmeyer, and especially to David Sprinkle for their efforts in proofreading this article. The opinions presented are the exclusive responsibility of the author.