Inequality and Convergence in Latin American Regional Trade Agreements

Abstract

The process of Latin American integration has been characterized by both significant advances and setbacks; it is driven by the potential for economic convergence, which seeks to reduce disparities and asymmetries among the region's countries. This article aims to estimate inequality indexes and assess the presence of convergence within and among Latin American integration blocs—The Pacific Alliance, the Andean Community, and the Southern Common Market. To achieve this goal, measures of inequality—including sigma dispersion, the Gini coefficient, and the Theil index—were calculated for the past 22 years. The findings indicate that inequality has increased throughout most of the studied period, with the Southern Common Market exhibiting the highest levels of inequality, followed by the Andean Community and the Pacific Alliance. Furthermore, the analysis of data from 1990 to 2021 reveals a lack of economic convergence between the Southern Common Market and the Andean Community during periods of unilateral trade liberalization, North–South free trade agreements, and the commodities boom. Similarly, the Pacific Alliance shows no evidence of economic convergence between its member countries. While the bloc's formation in 2012 suggests a possible shift in the trend, this change is insufficient to establish a definitive convergence.