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In: Economics

Title: Uruguay Head of New Economic Zone 1 Abstract: This video explores the how membership in...

Title: Uruguay Head of New Economic Zone 1


Abstract: This video explores the how membership in the MERCOSUR trading bloc has benefited the small country of Uruguay and the role Uruguay might play in the future of the trading alliance.

Uruguay Head of New Economic Zone - 3:16

Key Concepts: levels of regional economic integration, MERCOSUR, the European Union, the economic and political benefits of economic integration, globalization, international theory


Notes: Uruguay, which is located between Brazil and Argentina, is a small country with lots of farmland. The country is home to just 3 million people. In fact, cows out-number people three to one. Some 28 million sheep also call the country home. Uruguay is a member of MERCOSUR, a regional trading bloc that in addition to Uruguay includes Brazil, Argentina, Paraguay, and Venezuela.   


Membership in MERCOSUR has been beneficial to Uruguay. Because membership in the trading bloc gives Uruguay easy access to new markets, the country has seen its wool and meat exports rise, and as a result the creation of new jobs. Thanks to MERCOSUR, Uruguay now has access to some 200 million people, and companies are thriving on the opportunities they present. The Nordex car plant for example, which assembles cars for Peugeot and Renault has seen its sales to fellow-MERCOSUR members Argentina and Brazil triple, and as a result has doubled its workforce.


Uruguay’s former president Juilo Maria Sanguinetti recognizes that the trading bloc has its challenges, but believes that since MERCOSUR’s members share a common history, the alliance will succeed. In fact, Sanguinetti predicts that in the future, MERCOSUR will become a common market with a common currency. Sanguinetti realizes that his small country cannot compete with the much bigger countries of Brazil and Argentina, but he does see Uruguay as being central to the future of the bloc. Uruguay, he believes, is ideally suited to take on a leadership position in the bloc similar to the role of Brussels in the European Union. The other members of MERCOSUR seem to agree and construction is already underway for a building that will house the headquarters of the trading alliance.


Discussion Questions: In addition to the video and abstract provided, find current event topics to address the following questions. Questions may be answered as numbered. Points will be deducted for responses lacking external resources.


Reflect on the economic and political benefits of membership in a trading bloc. How has participation in MERCOSUR helped Uruguay?

Consider what regional economic integration means to companies. What impact has Uruguay’s participation in MERCOSUR had on the Nordex auto assembly plant?

Trading alliances like MERCOSUR have often been criticized for changing the direction of trade in a way that may not be beneficial for all countries. Explain the concepts of trade creation and trade diversion. How do these concepts apply to MERCOSUR?

The former president of Uruguay believes that MERCOSUR may be in a better position than the European Union to achieve long-term unity because of the shared history of its members. What does he mean by this? Why is it important?
Submit your document below in APA format. Page limit is based on the thoroughness of your answers.

Solutions

Expert Solution

Answer -1

Development of an economy is consider as migrating of economy from agriculture economy to non-agriculture economy. It’s require huge amount of investment, technological development, and access of new markets. According to Wikipedia source Uruguay has highest per capita income in Mercosur member’s countries. So Uruguay has highest power of per capita investment in Mercosur member’s countries and investment cause new industry, technological development, less unemployment. Well, investment is not enough for development industry require demand for products, and MERCOSUR trading bloc has open new market for the industry.

Uruguay is small country with very low population and area wise, it can not save its sovereignty alone. So Uruguay need alliance and MERCOSUR have proven good alliance as for.

Answer – 2

For companies economic integration mean is fair and free trade between and particular regions. MERCOSUR members countries has fair and free trade between country, by joining them its become a very large market for any company or plant like Nordex auto assembly plant. That create high demand of Nordex products.

Answer – 3

            Each country is specialize in something and have advantage over other countries. Mostly trade union try to make economic policies so all country can gain surpluses/profits by working on there specialties and this call as trade creation. Sometime trade union economic policies become disadvantage for some country and they did not get any surpluses or profit but some get it a lot, this is known as trade diversion. well, in the case of MERCOSUR each member country is gaining its GDP, by using there geographical advantage each member county is specializing in something ( except Venezuela, cause of political conflict in country).   

Answer – 4

            European Union is a result of world war and conflict in trade tariff. It members have different social, political, economical and ideological history. But MERCOSUR members had been exploit by own country same time and got freedom in same era, economical and social problem in these was almost same. MERCOSUR is a result of integration of trade.     


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