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  1. #1
    Miami Nice!
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    From the Listin Diario today...it happened in Montevideo, Uruguay...

    http://www.listindiario.com/cuerpos/republica/rep1a.htm

    Do you guys that live in DR think this will be good for the country?

    MQ

  2. #2
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    Quote Originally Posted by Musicqueen
    From the Listin Diario today...it happened in Montevideo, Uruguay...

    http://www.listindiario.com/cuerpos/republica/rep1a.htm

    Do you guys that live in DR think this will be good for the country?

    MQ
    This will be benefitial more to the DR than the mercosur nations. A free trade agreement with those countries on the similar scale of the CAFTA agreement will benefit DR more so than the perpetrators of such agreements based on one simple thing called economy of scale.

    For the non-economists out there, an economy of scale is the lower of cost per unit of production as production increases.

    Mercosur is a large market area, ecompassing Uruguay, Argentina, Brasil, and Paraguay. The size of the Argentinian and Brasilian market is sufficient to grant the Dominican Republic more economy of scale and increase exports to Mercosur. The Uruguayan market is very small, even smaller than the DR, but since its part of the Mercosur it will simply marginally enhance the economy of scale of the DR towards that trade block.

    Much how CAFTA will give bigger benefits to the DR and the other Central American countries with little gains to the United States, because there is more economy of scale in the American market due to its large size that Dominican companies would have a better chance of expanding beyond the contours of the DR and further enrich the country via higher sales volume and the taxation that follows every sale made.

    Thus, yes, an agreement with Mercosur (or any market economy that is bigger than the DR) will be in the best benefit of the country and its economy.

    -NAL
    Last edited by NALs; 12-09-2005 at 07:28 PM.

  3. #3
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    Quote Originally Posted by Nal0whs
    Mercosur is a large market area, ecompassing Uruguay, Argentina, and Chile which are three of the wealthiest Spanish speaking countries in the world.
    NAL, you need to re-check your facts. The four MERCOSUR nations are Argentina, Brazil, Paraguay and Uruguay. Bolivia and Chile have only associate status -- a status not yet that meaningful in trade terms.

    Regards,
    Keith

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    Quote Originally Posted by Musicqueen
    From the Listin Diario today...it happened in Montevideo, Uruguay...

    http://www.listindiario.com/cuerpos/republica/rep1a.htm

    Do you guys that live in DR think this will be good for the country?

    MQ
    MQ, I find it... puzzling. The DR has not yet fully digested the FTAs it negotiated with CARICOM, the Central American states and DR-CAFTA. And given the product/service profiles of MERCOSUR and the DR, I'm not sure what mutual advantage the two sides in it yet, beside political-symbolic.

    I do suspect that this is one more sign (as if any more were needed, especially after the just-anounced separate accord between Peru and the US) that FLAA (ALCA) is dead, and a patchwork of bilaterals and subregional accords is all we're going to see for quite some time....

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    MQ, since you have Uruguayan roots, you may have have heard this one. My Argentine and Uruguayan friends joke that Brazil is the "MERCO" in MERCOSUR and the other three are the "SUR." Point being, the Brazilian market drawfs the others and the Brazilians have gotten more benefits than any single country. I think if there were true free trade negotiated between MERCOSUR and the DR, Dominican agriculture and what little industry it has left would be in serious competitive trouble from the Brazilians. My dos cheles

  6. #6
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    Quote Originally Posted by Keith R
    NAL, you need to re-check your facts. The four MERCOSUR nations are Argentina, Brazil, Paraguay and Uruguay. Bolivia and Chile have only associate status -- a status not yet that meaningful in trade terms.

    Regards,
    Keith
    Brasil is also a member?! Interesting.

    If so, then its even better since Brasil is the largest economy in South America, even more economy of scale than I initially thought!

    -NAL

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    Quote Originally Posted by Keith R
    MQ, since you have Uruguayan roots, you may have have heard this one. My Argentine and Uruguayan friends joke that Brazil is the "MERCO" in MERCOSUR and the other three are the "SUR." Point being, the Brazilian market drawfs the others and the Brazilians have gotten more benefits than any single country. I think if there were true free trade negotiated between MERCOSUR and the DR, Dominican agriculture and what little industry it has left would be in serious competitive trouble from the Brazilians. My dos cheles
    Actually Keith,

    The biggest benefits has gone to Argentina and Uruguay as oppose to Brasil.

    Why?

    The economy of Brasil is much bigger than the economy of Argentina and gigantic compared to the economy of Uruguay. What does this means?

    Uruguayan and Argentinian companies increased their market area in a much greater fashion than did Brasilian companies.

    In other words, 3 million uruguayans and 20 odd Argentinians being opened to Brasilian enterprises is not as benefitial as 90 million Brasilians being opened to uruguayans and argentinian enterprises.

    These free trade agreements always benefit more the smaller nation than the greater nation, due to economic of scale.

    The more economy of scale available, the better the production and the more efficient it becomes to produce anything that has a lowering marginal cost as production increases!

    -NAL

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    Hmmm, well, Nal, tell that to the Argentine and Uruguyuan businessmen. They're not yet as convinced as you are.

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    Quote Originally Posted by Keith R
    Hmmm, well, Nal, tell that to the Argentine and Uruguyuan businessmen. They're not yet as convinced as you are.
    It's not about being convinced.

    Enterprises in smaller nations gain much more from trade blocks and agreements than does enterprises in bigger nations by the sheer nature of economy of scale.

    There are some industry that the DR cannot do because we have no economy of scale in such industry, such as car manufacturing. Anyone who attempts to form a Dominican car company will not survive because our market is not big enough to allow any lowering of costs as production goes up in such industry.

    However, if (and this is occuring) the hypothetical DR car company is now able to sell its automotives to larger markets with no duty imposed, low transport costs, etc via a trade agreement between the two markets, then it becomes much more sensible and economically viable to create such company.

    Of course, this is a highly simplistic example and, of course, there are other factors that would influence the profitability of a Dominican car company. In fact, it would be very hard to initiate a car company is just about any price range due to better efficiency in production from Japanese and to a certain extent, Korean manufacturers. Not to mention that the global automotive industry is extremely competitive and you never want to enter an industry that has too much competition due to issues with market share and the lower probability of making good profits if any at all. Unless, of course, the automotives being offered are automobiles that drive on solar energy alone, while reaching the average speed, torque power, etc of similar gas based or hybrid models, in such case then it is sensible to enter the car industry since the product would be highly popular in energy strapped countries bleeding due to high energy costs and thankfully, most high consumption and wealthy economies are in this category.

    However, putting all of that aside and assuming easy market entry and the sort, economy of scale would allow more benefit to the Dominican car company that it would offer to the foreign car company that would be able to expand much less into the much smaller Dominican market.

    With the case of the Argentinian and Uruguayan, the same should have occured, albeit, I am aware that Argentina and Uruguay (Argentina until recently) had/have respectively, high labor costs compared to Brasil. Uruguay is the only one that has high labor costs compared to Brasil at the moment, Argentina, thanks to the crisis and devaluation of currency now has a labor force with a comparable cost to that of Brasil and Argentinian companies should have benefited from any free trade agreement between much smaller Argentina and much greater Brasil.

    I would like to know in what sector these enterprises which did not "do well" are located in? What companies were these exactly? Are the income statements, balance sheet, etc readily available for the general public to view and where?

    -NAL

  10. #10
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    What does Tony think about this? Sorry I couldn't resist.

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