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Email this citationCIAO DATE: 10/02
Economic Development and Asymmetries in MERCOSUR: The Prospects of a MERCOSUR Regional Development Fund
Fernando Masi and Amaury Hoste
North South Center
University of Miami
April 2002
The signature of the Treaty of Asuncion on March 26, 1991, by Argentina, Brazil, Paraguay and Uruguay initiated the creation of a common market called the Mercado Com'n del Sur (Southern Common Market - MERCOSUR). The signatory governments hoped that the economic growth subsequent to the creation of this organization would contribute to a better convergence among them. After 10 years in existence, it seems that MERCOSUR has not lived up to these expectations. At all levels -- economic, social, and infrastructural -- enormous asymmetries still exist among MERCOSUR member states and their regions. Since MERCOSUR is heading toward establishing a customs union and a common market, in spite of the drawbacks due to the recent economic crises in the region, the governments of the member states will need to address in their agenda the issue of regional disparities among them. Indeed, for MERCOSUR to be a harmonious and homogeneous common market, member states must reduce the disparities in development that exist among their regions. To bring this about and in light of the experience of other economic integration processes in other parts of the world, MERCOSUR countries might create as a financial instrument to reduce these disparities a MERCOSUR Regional Development Fund (MRDF).
Before looking into the issue of an MRDF, it is necessary to describe the existing situation of national and regional disparities within MERCOSUR as well as the very few policies that already have been implemented within MERCOSUR to reduce these disparities through differential treatment. To highlight some of the existing disparities within MERCOSUR countries, the respective situations of the four member states will be analyzed by pairs in this study. To take into consideration the differences of geographical size, the two smallest members, Paraguay and Uruguay, will be analyzed at the national level, while Argentina and Brazil will be considered from a regional point of view. This comparison of Argentina and Brazil by regions highlights the significance of regional disparities that exist within these countries. Moreover, to complete the picture of the present disparities in MERCOSUR, we will also analyze existing preferential treatment policies in these countries to understand what actions have been adopted at the MERCOSUR level to assist the smaller member states.
Having examined the present situation, it is possible to think ahead and consider the creation of an MRDF as a way of reducing disparities within MERCOSUR. Before focusing on MERCOSUR itself, however, and to draw several useful lessons for MERCOSUR, it also seems appropriate, as previously mentioned, to consider the experience of other development. After considering the existing development gaps within MERCOSUR and reviewing the experiences of other funds, it may be possible to define some important characteristics of a MERCOSUR Fund. Given the length of this topic, this paper only focuses on two aspects of an MRDF, that is, its institutional structure and the definition of its priorities.
