Economic Integration in Latin America: a Reality or a Mith?

scotch desegregation in LATAM A Reality or a Myth Oscar R. Martinez Latin Ameri clear International dealings 19 exhibit 2013 Integration for Latin the Statesn (LATAM) states has been an overarching approach when discussing opposed relations in the occidental hemisphere. such(prenominal) of the literature proposed in this class proposes the intentions of LATAM states to integrate at distinct levels. However, this make-up will demonstrate that regional frugal desegregation is formally happening. Yet, it form weak and inconclusive.Internal bureaucracy and the lack of commitment to these integrating efforts overshadow the intentions for sparing consolidation. This constitution will examine the different strategic pickaxs for sparing integration in LATAM, the reason why LATAM states seek for economic integration and more than or less distinguishedly the parts impeding and weakening regional integration in the western hemisphere. This analysis is base on the histo rical evidence of LATAM states behavior and affair trends. To grasp the ongoing economic liberalization policies in LATAM, we essential scratch understand viable strategic options of economic integration for LATAM states.After the Cold War, Latin the States faced a prospect of marginalization. The distinctive economic disadvantages to fence in the world economics presented different strategic integration options that could return the foundation for long-term development and growth. Peter H. Smith proposed four different economic integration options for Latin America at the beginning of the innovative millennium unilateral liberalization, joining with the North, extra-hemispheric partnership, and regional integration.These strategic models accentuated the different in stock(predicate) options LATAM states could consider in effectuate to the meet policy-making and economic agendas. The rootage strategic option available is the unilateral liberalization of economic programs to confirm commercial and financial ties with major power centers. This option allows countries to center on export-led development were internal policies focuses on the diversification of products and partners and continually seek foreign investments from multiple sources. Chile is an example of using this lucrative option.Before Pinochet, Chile exercised protectionist parcel out policies that suffocated its employment opportunities throughout the globe. Pinochets economic reforms resembled this option advocating free trade and allowing Chile to develop commercial ties with Europe, Japan, and the join States without allowing dependence to any one trade partner. Chile has the near signed free trade agreements in South America. The second strategic option is joining economic effort with the fall in States. This alternative seems beneficial for LATAM countries because it overly integrates them with the world economic system.LATAM states understand the flowing economic positi on of the United States and its interdependence in the world(a) economy this assertion could incentivize other countries to meet their economic ambitions at a orbicular scale. Countries conniption this option as an opportunity to integrate with the strongest worlds economy, which will enable them to gain prestige and merchandise opportunities in the global marketplace. Mexico has followed this option, virtuallyly because of its geographic proximity to the United States, benefitting from the free access to the U.S. marketwith NAFTA and tormenting from its sole dependence. In 2011, nearly 80% of Mexicos exports were tied to the United States. This can be referred as putting most of your eggs in one basket. Nevertheless, the Mexican economy has significantly grown since NAFTA. The third strategic options is seeking extra-hemispheric partnership. LATAM leadership have the option to develop economic ties with extra-hemispheric trading blocs such as the European Union and the Asian -Pacific Region.LATAM countries to offset the hegemonic position of the United States often use this option. Argentina, Brazil, Chile, Cuba, Peru, and Venezuela have made remarkable efforts in practice session this option in the past decade. Some countries and/or regional trading blocs see this as a feasible option due to the ambition and intense bureaucratic limitations within their own region or subregion. Consequently, this option allows LATAM states to diversify their trading partnership. The fourth and final strategic option is the of entailment focus for this paper.The regional/subregional economic integration option affirms self-reliance. This alternative provides a realistic approach in changing economic configurations of international power. Therefore, we must further examine this option and explain why LATAM insist on integrating their economies. Regional economic integration agreements depend on the motivation, form, coverage and content. It is often that the major a ctors set the agenda non only with the view of constructing and retaining power at that regional level but also to defecate global precedents.According to Smith, given(p) the diversity of interests and economic structures, Latin American leaders have focused not only on continental trade union but on subregional integrationprojects for economic cooperation among groups of Latin American countries, instead than for the continent as a whole. The level of interest in regional integration depends on what cost/benefit (political and economical) analysis in the countries involved. We can argue that Latin America is not homogeneous block, therefore, the different intentions and unavoidably from from each one coun savor drive regional economic integration at different scales.Nevertheless, LATAM countries insist in integrating their economies for more relevant chemical elements. First, they precious to keep their market open for trade (market liberalization). After the Cold War, ma turation countries in the region needed to emergence their trade opportunities in order to level the economic blow caused by developed nations. Open markets increase economic development among partner countries and enhance interaction and cooperation between states and markets. Economic Integration is also a way to over mother the limitation of junior-grade domestic help markets.Second, countries want to compete with other regional integration options. Countries that happen limited to an outside regional trading bloc will try to form its own to level the plain field. The Andean Pact (1989) was the basic economic integration effort in the western hemisphere. Others followed immediately later on this economic block was established Central American Common mart (CACM1990), Southern Common Market (MERCOSUR1991), and the North American Free dispense Agreement (NAFTA1993). LATAM countries were pressured to compete as a bloc instead as single element.Third, parkland norms and ideals spreading to the region encouraged economic integration between these countries. Former Venezuelan President Hugo Chavez led a common anti-US movement to contest different political and economic views. The Bolivarian Alternative for the Americas (ALBA) create by President Chavez intended a regional cooperation of many LATAM countries based on the idea of the social, political and economic integration. The Bolivarianism movement is an effort to symmetry against the Washington consensus and liberal markets sponsored by the US.These type economic integrations have more of a completion of economic, social and political ideals. Diana Tussie articulates, Regionalism in Latin America is not just a single tidy entity but has given way to many coexisting and competing projects with fuzzy boundaries. Regional integration provides a variety of incentives for LATAM countries, however, not everything is as easy as it seems. LATAM effort for regional integration started in 1960 with the Latin American Free trade intimacy (LAFTA), however, this and other regional integration projects failed due to the internal and external factor that limited or impeded its success.Numerous internal and external factors impeding effective economic integration continue to weaken these regional efforts. Internal factors such as commodities-based economies and domestic policies influence the commitment and participation to these integration projects. outside factors such other attractive international options also weakens the regional economic integration. Regional integration is constantly threatened by these factors and it is more distinct in Latin America. Despite of the formal integration, the effectiveness of these regional institutions is outright affected by domestic elements.The first internal factor touch this regional integration endeavors is the number of commodities-based economies. The commodities for countries are not complimentary with each other. Competition for the op en trade in the global market becomes ferociously competitive. Countries will ignore treaties to gain competitive advantage. The commodity lottery or the random allocation of natural resources endowments seems to be an influential factor when decision making trading partners. For example, Brazil and Argentina are some(prenominal) members of MERCOSUR, but both are competing for the right to export their agricultural and energy products outside the region.Tussie reveals this do by stating that regional institutions remain feeble, honoured more in spirit than in letter, and intra-regional relations are frayed with competing development projects. The second internal factor is domestic policies. This factor impeding the effective economic integration is distressed in two different elements changes in regime and bureaucratic domestic pressures. The constant changes of political regimes affect the stability of a regional institution. Establishments of upstart political reforms will directly affect economic ambitions set in treaties by previous regimes.An example of General Pinochet economic reform in Chile has isolated its regional neighbors. The drastic withdrawal of Chile from the Andean Pact and the sway of neo-liberalism generated major economic crises, antagonism to region-wide industrial planning, and a backlog of non-compliance decisions in the region. Hugo Chavez in Venezuela has also stirred the pot on the new endeavors for MERCOSUR, making this trading bloc more of a political instrument rather than an economic integration system. Other domestic pressures come from the legislative institutions blocking and making these trading initiatives almost impossible to achieve.The bureaucratic process to ratify new or change current treatiesin particular Free address Agreementsseems to discourage any further economic integrations. Countries such as Colombia, Chile, Costa Rica would rather sign unilateral treaties than launching into a regional bloc. The fina l factor affect the economic integration in Latin America is the recognition of a more attractive option outside their region to integrate their economies. Research shows that less than 28 percent of the overall trade in in Latin America is intra-regional.This means that economic institutions in Latin America do not take advantage or effectively use their regional partners for trade. For most of the LATAM countries, their top five trading partners include the United States, mainland China, and the European Union. Again, the commodity lottery plays a huge role in the influence of why these countries prefer other international states for economic integration. The United States is the most important trading partner for most of the LATAM countries. The economies of many of these LATAM countries depend on the import and export with the United States.Their economic dependence influences some regional decisions. Nevertheless, these economic decisions could be used to balance against the U nited State, even though this could also hurt their own economy. For example, Venezuelas largest trading partner is the United States. Yet, Venezuelas domestic and regional economic policies continue to challenge those economic practices it depends the most on. Another huge external factor is the emergence of China and its economic influence in Latin America. LATAM countries see China as a potential alternative from the northern hegemony.Also, Chinas manufacturing industry is exceedingly competitive from those in Latin America. Many countries would prefer cheaper Chinese construct good than a more expensive one from their regional partners. China indeed affected the regional integration in Latin America. As expressed by Tussie, referring to regional economic institutions, it has as an epic attitude as a preferred tool for promoting social rather than classic market goals. Historically, regional integration has always been part of the LATAM culture. Whether for political or econ omic gains, the effort to form these institutions is relevant and somehow too optimistic.This paper displays different economic options LATAM states have in regards to economic integration. It also defines regional or subregional integration and lists some of the reasons why LATAM states insist in regional integration. Finally, the evidence and examples shown of the internal and external factors that impede and/or weaken regional integration support the following conclusion. A pragmatic approach in the economic and trading decisions seem to dominate the foreign policies of most LATAM countries, affecting the strength, legitimacy, and relevance of these formal regional institutions. - 1 . Peter H. Smith, Strategic Options for Latin America, Latin America in the New World System, in Latin America in the New International System, ed. Joseph Tulchin and Ralph Espach (Boulder, Colorado Lynne Rienner, 2001), 38. 2 . ibidem , 35-36. 3 . ib. ,39. 4 . Ibid. , 39-41. 5 . US Relations w ith Mexico, Bureau of Western Hemisphere Affairs, US Department of State, accessed on touch 15, 2013, http//www. state. gov/r/pa/ei/bgn/35749. htm. 6 . Smith, Strategic Options Latin America, 46-53. 7 .Diana Tussie, Latin America Contrasting Motivations for Regional Projects, Review of International Studies 35, S1 (2009), 169-188, doi10. 1017/S026021050900847X. 8 . Smith, Strategic Options Latin America, 46. 9 . Tussie, Contrasting Motivations Regional, 170. 10 . Ibid. 11 . Francisco E. Gonzalez, Latin America in the Economic EquationWinners and Losers What can losers do? in Chinas Expansion into the Western Hemisphere Implications for Latin American and the United States, ed. Riordan Roett and Guadalupe Paz (Washington, D. C. Brookings Institution Press, 2008), 151. 12 .Tussie, Contrasting Motivations Regional, 170. 13 . Ibid. , 174. 14 . International look at and Market Access Data, World Trade Organization website, accessed on March 3, 2013, http//webservices. wto. or g/resources/profiles/MT/TO/2011/WLD_e. pdf. 15 . International Trade and Market Access Data, World Trade Organization website, accessed on March 3, 2013, http//www. wto. org/english/res_e/statis_e/statis_bis_e. htm? solution=WTO&path=/Dashboards/MAPS&file= Map. wcdf&bookmarkState=%22impl%22%22client%22,%22params%22%22langParam%22%22en%22. 16 . Tussie, Contrasting Motivations Regional, 176.