Abstract

VILLAGRA-PINA, Alberto; MENDOZA-GONZALEZ, Miguel Ángel  and  QUINTANA-ROMERO, Luis. A Comparative Approach to Integration and Trade Openness in the Economic Growth of the European Union and Latin America. Rev. mex. econ. finanz [online]. 2018, vol.13, n.1, pp.27-52. ISSN 2448-6795.  https://doi.org/10.21919/remef.v13i1.258.

The aim of this research is to prove whether Economic Integration and Trade Openness in countries of the European Union (EU) and Latin America (LA) helped alleviate previous Balance of Payments imbalances. The main contribution of the work consists on the comparative analysis between the EU and LA in two different periods of time (according to their economic integration) using the Westerlund panel cointegration technique (2007 and 2008) to prove the validity of Thirlwalls Law. The results show that the relative prices are not relevant in periods of Economic Integration and Trade Openness, consequently it was more appropriate to work with Harrods Dynamic Trade Multiplier. It is important to mention that, although the counterfactual approach is applied to different historical moments in Europe and Latin America, the results showed that the Economic Integration helped alleviate the Balance of Payments imbalances in European countries and Trade Openness caused a greater growth compatible with the Balance of Payments equilibrium for most Latin American countries.

Keywords : Economic Integration; Trade Openness; Economic Growth; Balance-of-Payments Restraint; European Union Countries and Latin America; F15; F13; F17; F43.

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