Specialization and exports in South America after trade agreements

Abstract

A vast body of literature recognizes that economic integration brings asymmetric benefits for the actors carrying out the process. Regional integration agreements influence the level of industrial activity and its location, preventing some countries from fully participating as beneficiaries. This study aims to examine the changes in production and export structures of South American manufacturing sector after the signing of trade agreements. We performed unit root tests with endogenous breaks, cointegration tests, and stochastic frontier models on production and export for the period 1985~2008. Our results show that after the signing of trade agreements, changes in the structure of production and export have been weak, and thus trade agreements have not boosted structural changes in specialization and export intensity in South American countries.