Open regionalism in the Andean Community: a trade flow analysis

This article evaluates the extent to which the establishment of the Andean Free Trade Zone (AFTZ) has led to an improvement of intra-regional trade, as promised by open regionalism, without reducing extra-regional trade. Open regionalism is a dynamic process in which economic agreements serve as intermediate steps towards integration with the world economy. The calculations of ex post income elasticities of import demand show that the establishment of the AFTZ in 1993 led to an increase in Andean Community trade, and not to a contraction of extra-regional trade. The intensity of trade index and the propensity to export intraand extra-regionally confirm this finding. The article discusses these results in the context of the multilateral trading system and the trade relations between the Andean Community and the rest of the world.