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Venezuela's road from CAN to Mercosur

Estupinan Enriquez, Camila LU (2010) NEKK01 20101
Department of Economics
Abstract
Latin America has throughout the years been home for different regional integration agreements. The two most recent examples of South American integration blocs are the Andean Community of Nations (CAN) and Mercado Común del Sur (Mercosur). This thesis focuses on the static effects of integration which are caused by the future inclusion of Venezuela, a new member to Mercosur. Moreover, Venezuela’s revealed comparative advantage and specialization in the fuel-sector are scrutinized, adding value to the analysis of trade effects of integration. The character of this study is explorative and forward-looking. It mainly aims at analyzing the likely outcomes of Venezuela’s integration to Mercosur in terms of trade creation and trade diversion.... (More)
Latin America has throughout the years been home for different regional integration agreements. The two most recent examples of South American integration blocs are the Andean Community of Nations (CAN) and Mercado Común del Sur (Mercosur). This thesis focuses on the static effects of integration which are caused by the future inclusion of Venezuela, a new member to Mercosur. Moreover, Venezuela’s revealed comparative advantage and specialization in the fuel-sector are scrutinized, adding value to the analysis of trade effects of integration. The character of this study is explorative and forward-looking. It mainly aims at analyzing the likely outcomes of Venezuela’s integration to Mercosur in terms of trade creation and trade diversion. To accomplish this, the author makes use of ‘Viner’s ambiguity’ crystallized in five conditions. The results of the study indicate that trade diversion dominates in four out of five analyzed conditions. However, the effects cannot be quantified and therefore a conclusion on whether integration will lead to welfare gains or losses is not possible. Venezuela is South America’s biggest oil-producing country. Hence, a thorough calculation on specialization using Balassa’s revealed comparative advantage on the fuel sector has been carried out. The results indicate that the revealed comparative advantage is lower for Venezuela in relation to CAN. This may imply that Venezuela has a greater potential in specializing in the fuel sector in the future bloc, Mercosur. (Less)
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author
Estupinan Enriquez, Camila LU
supervisor
organization
course
NEKK01 20101
year
type
M2 - Bachelor Degree
subject
keywords
Venezuela, Mercosur, Andean Community of Nations (CAN), economic integration, static effects, trade diversion, trade creation, oil, specialization
language
English
id
1607447
date added to LUP
2010-05-24 08:14:59
date last changed
2010-05-24 08:14:59
@misc{1607447,
  abstract     = {Latin America has throughout the years been home for different regional integration agreements. The two most recent examples of South American integration blocs are the Andean Community of Nations (CAN) and Mercado Común del Sur (Mercosur). This thesis focuses on the static effects of integration which are caused by the future inclusion of Venezuela, a new member to Mercosur.  Moreover, Venezuela’s revealed comparative advantage and specialization in the fuel-sector are scrutinized, adding value to the analysis of trade effects of integration. The character of this study is explorative and forward-looking. It mainly aims at analyzing the likely outcomes of Venezuela’s integration to Mercosur in terms of trade creation and trade diversion. To accomplish this, the author makes use of ‘Viner’s ambiguity’ crystallized in five conditions. The results of the study indicate that trade diversion dominates in four out of five analyzed conditions. However, the effects cannot be quantified and therefore a conclusion on whether integration will lead to welfare gains or losses is not possible. Venezuela is South America’s biggest oil-producing country. Hence, a thorough calculation on specialization using Balassa’s revealed comparative advantage on the fuel sector has been carried out. The results indicate that the revealed comparative advantage is lower for Venezuela in relation to CAN. This may imply that Venezuela has a greater potential in specializing in the fuel sector in the future bloc, Mercosur.},
  author       = {Estupinan Enriquez, Camila},
  keyword      = {Venezuela,Mercosur,Andean Community of Nations (CAN),economic integration,static effects,trade diversion,trade creation,oil,specialization},
  language     = {eng},
  note         = {Student Paper},
  title        = {Venezuela's road from CAN to Mercosur},
  year         = {2010},
}