'Economic Integration in Latin America: a Reality or a Mith?\r'

' economic Integration in LATAM: A Reality or a novel Oscar R. Martinez Latin the Statesn International dealing 19 March 2013 Integration for Latin American (LATAM) states has been an overarching approach when discussing foreign traffic in the western hemisphere. Much of the publications proposed in this class proposes the intentions of LATAM states to integrate at polar levels. However, this paper will distinguish that regional sparing integrating is dustally happening. Yet, it re primary(prenominal)s weak and inconclusive.Internal bureaucracy and the wishing of cargo to these desegregation trys overshadow the intentions for frugal consolidation. This paper will come across the antithetical strategic pickaxs for frugal desegregation in LATAM, the reason why LATAM states adjudicate for scotch integration and most of importly the factors impede and weakening regional integration in the western hemisphere. This analysis is based on the historical evidence of LATAM states’ behavior and calling trends. To grasp the ongoing sparing relaxation method policies in LATAM, we must basic make viable strategic selections of stinting integration for LATAM states.After the ratty War, Latin America confront a prospect of marginalization. The distinctive frugal disadvantages to grapple in the world stintings presented different strategic integration plectrons that could earmark the foundation for long-term pullulatement and growth. peter H. Smith proposed four different stinting integration options for Latin America at the beginning of the advanced millennium: biased liberalization, joining with the northwesterly, extra-hemispheric bulgenership, and regional integration.These strategic models accentuated the different available options LATAM states could consider in parade to the meet policy- do and sparing agendas. The setoff strategic option available is the peerless-party liberalization of economic programs to str engthen commercialised and financial ties with study military unit centers. This option allows countries to center on exportation-led education were congenital policies focuses on the diversification of products and partners and continually betk foreign investments from multiple sources. chile is an precedent of using this lucrative option.Before Pinochet, cayenne pepper exercised protectionist divvy up policies that suffocated its trade opportunities throughout the globe. Pinochet’s economic reforms resembled this option advocating vindicate quite a little and allowing chilly to develop commercial ties with Europe, Japan, and the join States without allowing dependency to any(prenominal) single trade partner. Chile has the most signed free trade agreements in South America. The second strategic option is joining economic lawsuit with the fall in States. This alternative bes beneficial for LATAM countries because it in any case integrates them with the wo rld economy.LATAM states understand the current economic localise of the United States and its interdependence in the global economy; this assertion could incentivize unexampled(prenominal) countries to meet their economic ambitions at a global scale. Countries view this option as an opportunity to integrate with the strongest world’s economy, which will enable them to mount prestigiousness and job opportunities in the global mart. Mexico has followed this option, for the most part because of its geographic proximity to the United States, benefitting from the free access to the U.S. securities industryâ€with NAFTA†and tormenting from its sole dependence. In 2011, nearly 80% of Mexico’s exports were tie to the United States. This can be referred as â€Å"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 lead ers relieve oneself the option to develop economic ties with extra-hemispheric trading axiss such(prenominal) 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 fix made remarkable exertions in workout this option in the past decade. virtually(prenominal) countries and/or regional trading blocs see this as a feasible option due to the competition and intense bureaucratic limitations within their own region or subregion. Consequently, this option allows LATAM states to diversify their trading partnership. The tail and closing strategic option is the main focus for this paper.The regional/subregional economic integration option affirms self-reliance. This alternative provides a true to life(predicate) approach in changing economic configurations of world(prenominal) power. Therefore, we must further examine this option and explai n why LATAM maintain on integrating their economies. Regional economic integration agreements depend on the motivation, form, reporting and content. It is often that the major actors set the agenda not only with the view of constructing and retaining power at that regional level save alike to establish global precedents.According to Smith, â€Å" minded(p) the diversity of have-to doe withs and economic structures, Latin American leaders have foc apply not only on chasteal amalgamation but on subregional integrationâ€projects for economic cooperation among groups of Latin American countries, preferably 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 postulate from each country drive regional economic integration at different scales.Nevertheless , LATAM countries insist in integrating their economies for more(prenominal) than relevant factors. First, they wanted to keep their food market impolite for trade (market liberalization). After the Cold War, developing countries in the region essential to increase their trade opportunities in come out to level the economic blow caused by developed nations. Open markets increase economic development among partner countries and enhance fundamental interaction and cooperation between states and markets. Economic Integration is likewise a way to overcome the limitation of small municipal markets.Second, countries want to compete with other regional integration options. Countries that smelling limited to an exterior regional trading bloc will try to form its own to level the plain field. The Andean Pact (1989) was the first economic integration effort in the western hemisphere. Others followed immediately after this economic block was effected: Central American Common co mmercialise (CACMâ€1990), Southern Common merchandise (MERCOSURâ€1991), and the North American Free clientele arrangement (NAFTAâ€1993). LATAM countries were pressured to compete as a bloc instead as single element.Third, popularplace norms and conceptionls 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) formed by President Chavez intended a regional cooperation of more LATAM countries based on the idea of the social, political and economic integration. The Bolivarianism movement is an effort to balance 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, â€Å"Regionalism in Latin America is not just a single neaten en tity 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 association (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 prevent effective economic integration expect to weaken these regional efforts. Internal factors such as commodities-based economies and municipal policies crook the commitment and participation to these integration projects. External factors such other attractive international options in any case weakens the regional economic integration. Regional integration is constantly threatened by these factors and it is more evident in Latin America. scorn of the formal integration, the ef fectiveness of these regional institutions is out decline refered by domestic elements.The first internal factor pretending this regional integration endeavors is the number of commodities-based economies. The commodities for countries are not complimentary with each other. Competition for the open trade in the global market becomes fiercely competitive. Countries will ignore treaties to gain competitive advantage. The â€Å"commodity lottery” or the random allocation of natural resources endowments seems to be an influential factor when deciding trading partners. For example, Brazil and Argentina are both members of MERCOSUR, but both are competing for the right to export their agricultural and energy products outside the region.Tussie reveals this issue by stating that â€Å"regional institutions watch feeble, honoured more in spirit than in letter, and intra-regional relations are frayed with competing development projects. ” The second internal factor is domest ic policies. This factor impeding the effective economic integration is broken in both different elements: changes in regime and bureaucratic domestic pressures. The constant changes of political regimes affect the stability of a regional institution. Establishments of new political reforms will directly affect economic ambitions set in treaties by previous regimes.An example of General Pinochet economic reform in Chile has stranded 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 t o achieve.The bureaucratic process to ratify new or change current treatiesâ€in item Free plow Agreementsâ€seems to discourage any further economic integrations. Countries such as Colombia, Chile, Costa Rica would rather sign nonreversible treaties than entering into a regional bloc. The final factor bear upon the economic integration in Latin America is the acknowledgment of a more attractive option outside their region to integrate their economies. inquiry shows that less than 28 percent of the boilers suit 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 round top five trading partners include the United States, China, and the European Union. Again, the â€Å"commodity lottery” plays a huge role in the influence of why these countries prefer other international states for economic integration. Th e 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 United State, even though; this could also hurt their own economy. For example, Venezuela’s largest trading partner is the United States. Yet, Venezuela’s domestic and regional economic policies move to challenge those economic practices it depends the most on. another(prenominal) huge external factor is the egression of China and its economic influence in Latin America. LATAM countries see China as a potential alternative from the Union hegemony.Also, China’s manufacturing industry is super competitive from those in Latin America. some(prenominal) countries would prefer cheaper Chinese manufactured inviolable than a more expensive one from their regional partners. China indeed alter the regional integration in Latin America. As expressed by Tussie, referring to regional economic institutions, â€Å"it has as an ‘epic’ posture as a preferred rotating shaft for promoting social rather than mere market goals. ” Historically, regional integration has always been part of the LATAM culture. Whether for political or economic gains, the effort to form these institutions is relevant and somehow as well as 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 promote the following conclusion. A pragmatic approach in the economic and trading decisions seem to dominate the foreign policies o f most LATAM countries, affecting the strength, legitimacy, and relevance of these formal regional institutions. ——————————————- [ 1 ]. Peter H. Smith, â€Å"Strategic Options for Latin America,” Latin America in the New humanity System, in Latin America in the New International System, ed. Joseph Tulchin and Ralph Espach (Boulder, Colorado: Lynne Rienner, 2001), 38. [ 2 ]. Ibid. , 35-36. [ 3 ]. Ibid. ,39. [ 4 ]. Ibid. , 39-41. [ 5 ]. â€Å"US dealings with Mexico,” Bureau of occidental Hemisphere Affairs, US Department of State, accessed on March 15, 2013, http://www. state. gov/r/pa/ei/bgn/35749. htm. [ 6 ]. Smith, â€Å"Strategic Options Latin America,” 46-53. [ 7 ].Diana Tussie, â€Å"Latin America: separate Motivations for Regional Projects,” Review of International Studies 35, S1 (2009), 169-188, inside:10. 1017/S026021050900847X. [ 8 ]. Smith, â€Å"Strategic O ptions Latin America,” 46. [ 9 ]. Tussie, â€Å" distinguish Motivations Regional,” 170. [ 10 ]. Ibid. [ 11 ]. Francisco E. Gonzalez, â€Å"Latin America in the Economic Equationâ€Winners and Losers: What can losers do? ” in China’s 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, â€Å"Contrasting Motivations Regional,” 170. [ 13 ]. Ibid. , 174. [ 14 ]. â€Å"International Trade and Market Access Data,” World Trade disposal website, accessed on March 3, 2013, http://webservices. wto. org/resources/profiles/MT/TO/2011/WLD_e. pdf. [ 15 ]. â€Å"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? result=WTO&path=/Dashboards/MAPS&file= Map. wcdf&book markState={%22impl%22:%22client%22,%22params%22:{%22langParam%22:%22en%22}}. [ 16 ]. Tussie, â€Å"Contrasting Motivations Regional,” 176.\r\n'