Trade, Integration and Economic Development: The EU and Latin America PDF
Preview Trade, Integration and Economic Development: The EU and Latin America
SpringerWien NewYork European Community Studies Association of Austria (ECSA Austria) Publication Séries Volume 13 Schriftenreihe der Ôsterreichischen Gesellschaft fur Europaforschung (ECSA Austria) SpringerWienNewYork Gabriele Tondl (éd.) Trade, Intégration and Economie Development The EU and Latin America SpringerWienNewYork Prof. Dr. Gabriele Tondl Research Institute for European Affiars, Vienna University of Economies and Business Administration Financial support was given by Bundesministerium fur Wissenschaft undForschung, Wien, and the European Commission, DG Education and Culture, Brussels This work is subject to copyright. AU rights are reserved, whether the whole or part of the material is concerned, specifically those of translation, reprinting, re-use of illustrations, broadcasting, reproduction by photocoping machines or similar means, and storage in data banks. © 2008 Springer-Verlag Wien Printed in Austria SpringerWienNewYork is a part of Springer Science + Business Media springer.com Product Liability: The publisher can give no guarantee for ail the information contained in this book. The use of registered names, trademarks. etc. in this publication does not imply, even in the absence of a spécifie statement, that such names are exempt from the relevant protective laws and régulations and therefore free for gênerai use. Typesetting: Caméra ready by editor Printing: Ferdinand Berger & Sôhne Gesellschaft m.b.H., 3580 Horn, Austria Printed on acid-free and chlorine-free bleached paper SPIN: 12064786 Library of Congress Control Number: 2008925001 ISSN 1610-384X ISBN 978-3-211-75149-7 SpringerWienNewYork Preface During the past decade, Latin American (LA) countries have become highly open economies. Trade agreements were imple- mented fostering trade relations both with other Latin American countries and with third countries, among them the main external trading partner, the EU and the US. This policy approach differs significantly from the import substitution policy dominating in LA in the 1970s. LA countries have developed manifold trade relations. At the same time economic integration has also developed in LA and become most advanced in the case of Mercosur. Especially for South America, Europe is an important trading partner and investor. Moreover, the economic integration process accomplished by the European Union (EU) is often seen as a role model for LA integra- tion. For both regions, the EU and LA, it is important to understand economic developments in the region of the trading partner and to know why the other side pursues certain interests in the process of trade negotiations. To deepen the understanding of these issues, is the main objective of this volume. The volume is the proceedings of the International Conference – 7th Arnoldshain Seminar on “Trade and Integration. The EU and Latin America”, organized at Vienna Economics University, August 28 – September 1, 2006. It was the 7th conference of the Arnoldshain Network, a group of academics from the Johann Wolfgang Goethe University Frankfurt, the Universidad Nacional de Cordoba, Argentina, the Universidade di Sao Paolo and the Vienna Univer- sity of Economics and Business Administration. The Arnoldshain network, named after the location of its first meeting in Germany, was founded under the wish to promote academic cooperation between researchers from Europe and Latin America and to support student exchange between the involved in- stitutions. At the Vienna conference, the network concluded the foundation of the “International Association for Comparative Eco- nomics and Integration” which should henceforth become the in- stitutional framework of the Arnoldshain Network to pursue its ac- tivities. The foundation meeting was attended by the network’ s initiator, Prof. em. Ulrich Peter Ritter, Prof. em. Roland Eisen (both Johann Wolfgang Goethe University Frankfurt), Prof. Díaz Cafferata, Prof. María-Luisa Recalde, Prof. Ángel Enrique Neder (all Universidad Nacional di Cordoba), Prof. Basilia Aguirre (Uni- VI versidade di Sao Paolo), Prof. Gabriele Tondl (Vienna University of Economics and Business Administration) and a number of new members from Europe and LA which contributed to the conference. The conference started with an introductory session where rep- resentatives from international institutions, government offices and academia introduced the conference subject and discussed the inter- ests of both regions. Ricardo Santiago, at that time director of the Inter-American Development Bank, Paris, sketched the recent economic developments and trade integration in LA. Alfredo Valladao, Professor and Director of the “Chair Mercosur”, Science Po, Paris, talked about the aims and achievements of Mercosur. Marcel Vaillant, professor at Universidad de la Republica, Uru- guay, explained the trade policy objectives of Mercosur vis-à-vis the EU while Philipp Dupuis, Deputy Head of Unit “Trade with Latin America”, Directorate External Trade, European Commis- sion, introduced the EU trade policy and the EU Latin America Agenda, and Andreas Melán, Head of the Latin American and Caribbean Unit, Austrian Foreign Ministry, reported on the latest EU- LA summit in Vienna in spring 2006 and the EU´s foreign policy with Latin America. The conference also hosted a Round Table on “Institutions and Good Governance” with Ulrich Peter Ritter, Peter Eigen,Head of Transparency International, Wolfgang Hetzer, Head of Unit Intelligence, European Anti-Fraud Office, and Basilia Aguirre, Universidade di Sao Paulo. During the other parts of the conference some 30 papers were presented and discussed by academics. Most of these papers are included in this volume. The books starts with the address of the initiator of the Arnoldshain Network and a protagonist of Com- parative Economics, on “James Fenimore Cooper: An Astute and Critical Precursor of Comparisons in the Social Sciences”. An in- troductory chapter by Gabriele Tondl follows explaining trade and integration within Latin America and with its main trading partners. The first part of the book on “Open Economy Macroeconomics” contains three papers: The paper of Sergio Barone and Alberto Díaz Cafferata discusses the relationships between exports, external debts and external solvency in Argentina before the 2002 crisis. Fernando Zarzosa Valdivia presents a general equilibrium model of an open economy with real exchange rate movements which explains the Dutch Disease and functional and sectoral income dis- tribution. The paper of Michael Brei contains an empirical analysis of the impact of current account reversals on relative prices in the VII Brazil. Part 2 of the volume deals with “Institutions for Develop- ment: The Case of Corruption” and contains a paper of Wolfgang Hetzer on the EU budget asking whether it is a breeding ground for corruption, and a second paper by Basilia Aguirre discussing the multiple faces of wrongdoing in the case of corruption Brazil. The third part of the volume contains seven papers which address “Trade and Integration Issues”. The paper of Laura Márquez- Ramos and Inmaculada Martínez-Zarzoso investigates empirically the effects of distance in a gravity model of foreign trade. Dierk Herzer looks at the composition of trade in Chile and its relation- ship with productivity. Felicitas Nowak-Lehmann Danzinger, Dierk Herzer, Sebastian Vollmer and Inmaculada Martínez-Zarzoso analyse the role of price competition for the market share of Chile in different European product markets. María Luisa Recalde and Marcelo Florensa investigate whether the implementation of Mercosur has lead to trade creation or trade diversion. Rinaldo Antonio Colomé and Fernando M. Giuliano explain the differences of agricultural policies in the European Union and LA countries and its consequences for agricultural trade. Matteo Grazzi and Antonella Mori discuss the regulations of FDI in some LA countries and their impact on FDI inflows. Ángel Enrique Neder, Julieta Schiro and Jonatan Saúl give an assessment of financial in- tegration in LA. Finally, part 4 deals with “Regional Issues”. It contains a paper by Jòse Luis Arrufat, Alberto J. Figueras, Valeria J. Blanco and M. Dolores De La Mata which analyses regional income mobility in Argentina. The second paper by Jorge Alberto Fornero investigates whether Mercosur countries converge in per capita GDP and finally the paper by Basilia Aguirre and Guilherme Dias discusses fiscal federalism in Brasil. The participants of the Vienna conference made a valuable contribution to develop research in the field of the objectives of the International Associa- tion for Comparative Economics and Integration. The Association welcomes that most contributions have found its way into this volumes. A special thank is owed to Nurgül Özen for her huge sec- retarial support to produce the publication. Gabriele Tondl President of the International Association for Comparative Economics and Integration Table of Contents Address of the Initiator of the Arnoldshain Seminars Ulrich Peter Ritter James Fenimore Cooper: An Astute and Critical Precursor of Comparisons in the Social Sciences 3 Gabriele Tondl Trade and Integration in Latin America and with Its Main Trading Partners 17 Part 1: Open Economy Macroeconomics 39 Sergio V. Barone and Alberto M. Díaz Cafferata Rigidities in Openness, Export Performance and Indicators of External Solvency in Argentina 41 Fernando Zarzosa Valdivia Real Exchange Rate Movements, Dutch Disease and Functional and Sectoral Income Distribution 81 Michael Brei The Impact of Current Account Reversals on Relative Prices: The Brazilian Experience 111 Part 2: Institutions for Development: The Case of Corruption 129 Wolfgang Hetzer The European Budget, A Breeding Ground for Corruption? 131 Basilia Aguirre The Multiple Faces of Wrongdoing – A Closer Look on Corruption 141 Part 3: Trade and Integration Issues 149 Laura Márquez-Ramos and Inmaculada Martínez-Zarzoso On Distance Effects in Gravity Models – Short Versus Long Distances 151 Dierk Herzer Trade, its Composition and Total Factor Productivity: Cointegration Evidence for Chile 169 Felicitas Nowak-Lehmann Danzinger, Dierk Herzer, Sebastian Vollmer and Inmaculada Martínez-Zarzoso Chile’s Market Share in the EU Market: The Role of Price Competition in a Panel Analysis Setting 189 María Luisa Recalde and Marcelo Florensa Mercosur: Trade Creation or Trade Diversion? An Application of the Gravity Model and Kalman Filter 221 Rinaldo Antonio Colomé and Fernando M. Giuliano Agricultural Policies and Trade in the European Union and Selected Latin American Countries 249 Matteo Grazzi and Antonella Mori The Regulation of FDI in Latin America and the Caribbean: What Impact on Host Countries? 271 Ángel Enrique Neder, Julieta Schiro and Jonatan Saúl Financial Integration in Some Countries of South America - The Use of Interest Parity Conditions as Indicators 307 Part 4: Regional Issues 323 Jòse Luis Arrufat, Alberto J. Figueras, Valeria J. Blanco and M. Dolores De La Mata Analysis of Regional Income Mobility in Argentina 325 Jorge Alberto Fornero Do Mercosur Countries Converge in Per Capita GDP and Productivity? 351 Basilia Aguirre and Guilherme Dias Fiscal Reform and Federal Relations 389 List of Authors 413
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