Trade in a World of Regions: The Case of MERCOSUR- UE

Santader

Conferencia; XXV International Congress of Applied Economics; 2011

International Association Applied Economics

The aim of the paper is twofold. First, it provides a brief overview of the current inter-regional relations between EU and MERCOSUR. Second, it seeks to determine the long-run reaction of MERCOSUR exports to different variables of relative prices and income. While some indicators reveal that EU is MERCOSUR?s first market for its agricultural exports, accounting really twenty per cent of total EU agricultural imports, the average long-run price and income reaction of MERCOSUR exports suggest the EU not to be an attractive destination for its exports. Some sectors may be of great significance to revert this situation and to strength trade relations between the two regions.