Transport Costs and "Natural" Integration in Mercosur

Azita Amjadi, L. Alan Winters
1999 Journal of Economic Integration  
The paper explores the argument that trade between the Mercosur countries should be stimulated by pre f e r ential policies because of their geographic pro x i m it y. That is, that the Mercosur countries are candidates for "natural" integration. The paper finds that, on average, transportation margins on trade within Merc osur and between Mercosur and Chile are about 6 percentage points lower than on trade with the rest of the world. That is a significant margin, and one that was reflected in
more » ... he countries' trade patterns even before regional trade agre ements reduced the policy-based barriers to mutual trade. But it is probably not l a r ge enough, in and of itself (without other benefits), to make the introduction of trade pre f e r ences desirable. The paper also explores the argument that absolutely high transportation costs between Mercosur and the rest of the world (that is, not
doi:10.11130/jei.1999.14.4.497 fatcat:raacf7ng55a7lpzxqxez7na3cm