A Mercosur development analysis: The effects of international agreements, and Covid-19 in the member countries

The Common Market of South America, or as known commonly, MERCOSUR, is a regional economic integration organization, established in 1991 by the Treaty of Asuncion and 1994 by the Protocol of Ouro Preto. The member countries are countries of the Latin America, when the most influential and the most important are the State Parties, countries with full membership rights, Argentina, Brazil, Paraguay, and Uruguay. In this study has been analysed mostly the economic aspects of the region but always considering the political events. In the Chapter I, has been explained the reason why the MERCOSUR was created, some of the most important events, and the organizational structure of the bloc organization. Then has been made an economic analysis of the impact of the creation of the region integration organization, in the development of the countries, analysing the GDP, trade flows and FDI, and has been tried to explain certain events, like the economic shocks and crisis, in a timeline from 1991 to 2019. All the data used have been downloaded as raw data, mostly from World bank database, EUROSTAT database, IMF database, and then have been analysed through Excel and Gretl. In Chapter II, some of the most important international agreements of MERCOSUR have been reviewed, focusing on the Free trade Agreement between EU – MERCOSUR. An economic analysis has been made using the trade flows of the full member countries of MERCOSUR and EU, in this analysis the Latin America region has been considered as well, to make a comparison between the bloc and the region’s economic relation with the EU. Some data have been used to demonstrate the beneficials from this bilateral trade agreement. In Chapter III, a gravity model of the economic integration has been analysed, to show the influence of the variables like the distance, the population, the income, shared variables like the common language, in the exports volume of a country in a bilateral trade. Brazil has been chosen to represent the MERCOSUR area, because of its large share of economy in the region, with some of the most important EU countries. After the gravity model, another model has been used, the fixed effect model, to analyse for the differences between two model results. In Chapter IV, the effect of the Covid-19 in the MERCOSUR area in the year 2020, have been commented, using some first statistical data. In Chapter V, the conclusions.