Paraguay and MERCOSUR: The Lesser of Two Evils?

This is the author's final draft. Copyright 2014 Taylor & FrancisThis paper examines Paraguay’s experience with MERCOSUR in terms of its impact on economic growth, trade, investment, industrial competitiveness and income distribution. Of particular interest is MERCOSUR’s impact on the flourishing border trade taking place under the “regimen de turismo”, a special tax regime for consumer goods, especially electronics. The author concludes that while MERCOSUR has not brought all the benefits expected from membership in the customs union, being excluded from MERCOSUR might have been worse for the Paraguayan economy