Revisiting the role of institutional and political factors on economic integration: the case of Latin America

Münich

Congreso; Sixteenth Annual Conference European Trade Study Group; 2014

LMU Münich and Ifo Institute

The recent conflict in Ukraine among pro-European integration groups and opponents,has increased the interest on the analysis on the determinants of regional integration.In fact, the events that are currently taking place in Europe point towards theimportance that institutional and political factors play on integration processes. From adiscrete choice framework, their relevance was already proven by Márquez-Ramos etal (2011), with a specific focus on the European integration dynamics. However, therelated literature has not focused on the importance that these factors might also havein Latin America, where there is an increasing heterogeneity among countries.Particularly, two integration axis can be distinguished: the Pacific axis presents acontinuity strategy, while the Atlantic axis presents an alternative strategy for regionalintegration. By focusing on both a cross-sectional and a panel data analysis for theLatin American integration process, we prove that institutional and political factors domatter. Furthermore, the role of these factors have been strengthened at the beginningof the present century due two main issues: the 11S and the ?Revolución Bolivariana?.Finally, our analysis also confirms that geographic, economic and trade policy aspectsare key elements for the formation and enhancement of economic integrationagreements in which Latin American countries are involved.Keywords: regionalism, Latin America, institutional and political