Impact of Crises on RTAs: MERCOSUR Trade in the pre-pandemic global economy

The pre-pandemic global economy was marked by the proliferation of regional trade agreements (RTAs) and the spread of crises, both of which are especially relevant for developing countries. This paper aims to provide evidence on the impact of crises on RTAs by studying the behaviour of trade flows and using MERCOSUR as a case study. We based our empirical strategy on a traditional gravity approach, differentiating according to the origin of the crises and the type of exported goods. We confirm that MERCOSUR has been able to mitigate external and domestic shocks, but has exacerbated the effects of regional ones. Our findings point to the difficulties in consolidating the industrialisation process in the context of macroeconomic vulnerability and volatility, even despite the existence of RTAs.