Andean Pact

The Cartagena agreement of May 1969 established the Grupo Andino or Andean Common Market. The pact sought to integrate the economies of Colombia, Ecuador, Peru, Bolivia, and Chile. Venezuela joined in 1973, and Chile withdrew in 1976. The primary objective of the Andean Pact was to promote regional industrialization. To this end, it adopted several innovative strategies: the elimination of internal constraints on trade, the formation of a common external tariff, the development of sectoral programs, and the strict regulation of foreign investment.

Initially the Andean Group's efforts at cooperation produced substantial increases in regional trade and industrial growth. By the 1980s, however, these positive trends were reversed. The policy of substituting local industrial products for imports was costly. Internal economic inequalities were intensified. Owing to the fragility of Andean economies and the international economic crisis, regional trade declined. Andean economic integration also suffered setbacks due to conflicts of national interest over tariffs, a boundary war between Ecuador and Peru, and failures to enforce Pact policies. Venezuela decided in 2006 to withdraw from the Group, citing dissatisfaction with the bilateral free trade agreements (FTAs) that Colombia and Peru signed with the United States. Despite making some progress in achieving economic unity, as of 2007 the Andean Pact had yet to overcome structural problems and deep-seated regional conflicts.

See alsoEconomic Integration .

BIBLIOGRAPHY

Roger W. Fontaine. The Andean Pact: A Political Analysis. Beverley Hills, CA: Sage Publications, 1977.

Lynn Krieger Mytelka. Regional Development in a Global Economy: The Multinational Corporation, Technology, and Andean Integration. New Haven, CT: Yale University Press, 1979.

Ciro Angarita and Peter Coffey. Europe and the Andean Countries: A Comparison of Economic Policies and Institutions. London: Pinter Publishers, 1988.

Additional Bibliography

Ocampo, José Antonio, and Pilar Esguerra. "The Andean Group and Latin American Integration." In Economic Integration in the Western Hemisphere, edited by Roberto Bouzas and Jaime Ros. Notre Dame, IN: University of Notre Dame Press, 1994.

                                      Steven J. Hirsch

                                   Alfonso W. Quiroz