South America

Hadi Alhorr, PH.D.

Boeing Institute of International Business
John Cook School of Business
Saint Louis University

South America: The Geopolitical

Setting

Physical barriers, the Andes and the

Amazonia , fragment south America. In
addition, linguistic, cultural, and racial
differences that can be traced back to
Spanish and Portuguese rivalry.
Dependence on similar commodities spur
national competition
Population is concentrated in highlands,
away from the coast. Hence, lack of highly
developed coastal ports

Geopolitical Forces of Separation

Centrifugal forces of separation:

Physical

Disputes over territorial expansion

Brazils inability to act as a regional actor of cohesion

Economic and Political

Sporadic, not continuous, efforts for economic

reforms
Lack of international political attention and FDI to the
region

Social

Relocation of population to central industrial nodes

Ethnic and racial differences

Geopolitical Forces of Attraction

Forces of attractions
Cultural

Common Latin culture

Economic

Complementarity of economies between mineral-rich

west and the east.
Dam Building for energy generation

Regional economic organization

Mercosur
Andean Group (1969)

Mostly economically unstable countries, except for Chile

Regulations to control foreign investment

Mercosur

Mercado Comun del Sur ( The Southern Cone Common

Market)
Members:

Associate members:

Argentina (1991)
Brazil (1991)
Paraguay (1991)
Uruguay (1991)
Venezuela (2006)

Chile (1996)
Bolivia (1997), in process of joining
Peru (2003)
Colombia (2004)
Ecuador (2004)

Former Associate members:

Venezuela (2004-2006), joined

Observer countries:

Mexico (2004), in process of becoming an associate member

Mercosur

Economic Integration

FTA
Customs Union
Economic Integration

Common market
Political and Economic

Mercosur is a customs union founded in 1991 by

the Treaty of Asuncin, which was later amended
and updated by the 1994 Treaty of Ouro Preto.
Its purpose is to promote free trade and the fluid
movement of goods, peoples, and currency.
Combined GDP = $1.5 trillion and the worlds
third-largest trading bloc and market
Implications include
Economic and infrastructure development
Political leverage upon member states

Prospects for Continental Unity

Brazils economic and population size

enables it to act as the key to continental
unity
Factors favoring economic development
prospects include:

Natural resources and its vast market

Strong Agricultural industry
Breadth of its industrial economy

Links with Maritime Europe and the United

States help enabling Brazil to take a
leading role

Prospects for Continental Unity

(contd)

Geopolitical unity is weaker in the

western South America
Internal violence and cross border
conflicts
Authoritarian regimes
Drug cartels supporting Marxist
guerrilla rebels