MERCOSUR as an export platform for the automotive industry

Abstract

The global automotive industry is dominated by a few multinational corporations which design global and regional strategies. If regional strategies prevailed over global ones, the Southern Common Market (mercosur) could become a competitive export platform. This paper reviews the extent to which trade agreements covering the automotive industry in mercosur have helped the region develop into a platform for exports to the rest of the world. Bilateral trade data from 1991-2005 and gravity models are used to evaluate trade creation and export market diversification in the automotive industry. The results show that, as of 2005, mercosur agreements had not turned the region into a platform for exports to external markets, although they had contributed to trade creation within the region.