Brazil as Paraguay's Principal Economic Partner: Structural Trade Integration, Energy Interdependence, and Regional Spillovers

This article examines the structural reasons why Brazil has emerged as Paraguay’s principal economic and business partner. Rather than focusing solely on bilateral trade volumes, the analysis emphasizes deeper mechanisms of integration, including geographic proximity, energy interdependence, complementary production structures, institutional arrangements under Mercosur, and macroeconomic spillover effects. The paper argues that Paraguay’s economic linkage with Brazil represents a form of asymmetric but mutually reinforcing integration, in which Brazil functions not only as a destination for Paraguayan exports, but also as a transmission channel for regional economic and financial shocks. Keywords Paraguay, Brazil, Trade Integration, Mercosur, Energy Exports, Regional Spillovers