A Concise Overview of the Rationale for, and History of the Common Market for South America (Mercosur)

UNIVERSITY OF STELLENBOSCH

A Concise overview of the rationale for, and history of the Common market for South America (MERCOSUR)

Name: Michelle dos Ramos

Student number: 16179056

Due date: 18 August 2011

Subject: Economics 244

Lecturer: Mr J. Fourie

Contents

Marking rubric Page 1

Front cover Page 2

Contents Page 3

Introduction and History Page 4

The rationale and outcomes of the established MERCOSUR Page 5 Conclusion Page 6

Bibliography Page 7 Plagarism declaration Page 8

Introduction

The 1970's and 80's brought with it devastating effects as the world’s economy went into an unforeseen recession. Interest rates in the US and Europe increased and Latin American governments found themselves drowning in debt and owing excessive amounts of money with no possible recourse.

The debt crisis not only had an economic effect but it also initiated political transformation with the collapse of the governing body in the region, namely Brazil and Argentina.

Liberalization, open markets, privatization and fiscal discipline were unheard of concepts to a region thwarted by authoritarian dictatorship, but with the transition to a free world with greater economic integration, a more optimistic future was on the rise for the region. In 1991 MERCOSUR was created to free trade and to protect the South American nations. It was first and foremost a political project, bringing Argentina and Brazil together with strong economic goals as well as trying to achieve social development goals (Mecham, 2003:370).

In this essay MERCOSUR’s history and fundamental reasons for existence will be discussed as well as the effects thereof. South America now had a means of measuring up to the standards of its European counterparts through this form of integration. Whether it has lived up to its set objectives is a much debated topic however.

History

In the mid 1980’s, Argentina and Brazil returned to...