Date of Award

2019

Document Type

Thesis

Degree Name

Bachelors

Department

Social Sciences

First Advisor

Hicks, Barbara

Area of Concentration

International and Area Studies and Political Science

Abstract

Over the past thirty years, trade liberalization has proliferated throughout the globe. Free trade agreements decrease transaction costs, strengthen democracy, and improve general welfare. One of the most impressive feats in trade liberalization came from Latin America when the Tratado de Asunción was signed in 1991 to form Mercosur. However, the Mercosur project has since stagnated. A full-fledged common market would promote democracy and stability in the region, helping Latin America to achieve political and economic prosperity. However, the Mercosur project has failed to reach initial expectations due to divergent economic paths between Argentina and Brazil, various domestic issues in each member-state, and pervasive corruption. Corruption contradicts Mercosur member-states’ goals to promote strong democratic institutions but has mixed effects for the trade bloc’s emphasis on economic development. Corruption is difficult to detect, but a corruption probe dubbed Operation Car Wash uncovered an expansive corruption network, and its investigations have cascaded into other corruption schemes. The private sector has an essential role in the integration of Mercosur, by aiding the adoption and internalization of norms, but can undermine the process through rentseeking behaviors. Due to Mercosur’s intergovernmentalist nature, the private sector exerts considerable influence over the integration process. The future of Mercosur rests in the informal sector and the governments of the member-states promoting regulatory convergence throughout the bloc. Nonetheless, corruption impacts the ability for effective policy-making to take place. It is difficult to pinpoint the exact effects of corruption on the expansion of Mercosur because the relationship between corruption and trade openness has been found to be non-monotonic. Nevertheless, the spread of corruption in the early 2000s coincided with Brazil’s infamous region-building infrastructure projects throughout Latin America. The crackdown on corruption in the past five years has created a unique opportunity for Mercosur member-states to increase transparency and accountability in the trade bloc. Corruption has hampered economic development and endangered crucial trade agreements within the bloc and outwards with the European Union. The next steps that Brazil and the other Mercosur member-states take to curb corruption will dictate the future of the trade bloc.

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