Trade complementarity and intra-industry trade between MERCOSUR and its main European Partners during 1991-2012: What does the evidence suggest?

Abstract

This paper studies the Trade Complementarity (TC) and the Intra-industry Trade (ITT) between MERCOSUR and its main European partners during 1992-2012 using sectoral Krugman and the Grubel-Lloyd Indexes. The decline in TC between Argentina and Brazil together with a convergence to similar levels with their key partners (Germany and Spain) indicates that the South American economies have tended to resemble in some aspects during the last 20 years rather than complementing themselves. Additionally, the increase in ITT between Argentina and Brazil in major manufacturing sectors seems to be consistent with the hypothesis of productive diversification, although the reduction in IIT with their European partners suggests that such diversification does not occur under a technologytransfer process.