Open Regionalism in the Andean Community: Trade Creation and Social Access
40 Pages Posted: 20 Apr 2000
This paper evaluates the open regionalism approach using the case of Ecuador?s trade liberalization and integration to the Andean Community. In the open regionalism view, regional economic agreements are seen as intermediate steps towards integration with the world economy. In a dynamic view of this process it is essential that several social groups, especially micro- and small-size entrepreneurs, have access to the market (social access) based on the increase of their income in order to augment its size. As a result, a regional agreement leads to a situation where there is pure trade creation and social access for low-income groups. The Andean Community shows that integration, by stages, into wider regional agreements seems to be a process that facilitates the promotion of technology-intensive industries and allows for the necessary social and economic transformation to face the world market, especially in the case of Ecuador. At the industry level, the transition of Andean regional exports is from unprotected natural resource and cheap labor-intensive industries to technology-intensive industries, thanks to the diffusion of productivity to the rest of the economy.
Keywords: Trade Liberalization, Open Regionalism, Latin America, Small Producers, Andean Community
JEL Classification: F15, O15, O17
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