Open Regionalism in the Andean Community : Creation or Deviation of Commerce?

This paper evaluates the extent to which the establishment of the Andean Free Trade Zone (AFTZ) has led to trade creation, as promised by open regionalism, or to trade diversion. The analysis of ex post income elasticities of import demand before (1980-1993) and after (1993-2000) the establishment of the AFTZ shows that the establishment of the AFTZ led to an increase of Andean Community trade, as the open regionalism view proposes, and not to a contraction of extra-regional trade. These results are confirmed by the intensity of trade index and the propensity to export intra- and extra-regionally