Evaluating Integration Choices: The Case of Bolivia

Evaluating Integration Choices: The Case of Bolivia

Regional integration initiatives have surged in Latin America while many countries have undertaken unilateral trade liberalization and external market access prospects have improved with the successful conclusion of the Uruguay Round. This paper examines and ranks the integration choices faced by one such country: Bolivia. To the extent that different regional trade agreements follow World Trade Organization rules, these agreements could increase market access and allow the countries to realize gains beyond those provided by unilateral liberalization. In this sense, a regional trade arrangement is not inconsistent with multilateral free trade based on the most-favored-nation (MFN) principle. In the final analysis with Bolivia, regional integration is not merely a matter of economics but relates to domestic and regional politics. To this end, MFN trade with concessions from both MERCOSUR and ANDEAN Group ranks best among the choices facing Bolivia. (JEL Classification: F14, F15)