Preferential trade agreements could lead to a reallocation of resources across sectors and countries. Production …, empirical evidence on South-South trade agreements is limited. The purpose of this paper is to fill this gap in the empirical …, and Uruguay over the period 1985-1998. We find that deepened preferential trade liberalization has fostered a reshaping of …

factors like distance and size as well as policy factors such as industrial, fiscal and trade policy. Results emphasize the … benefits of domestic trade and local fiscal policy rationalization on the stabilization of output fluctuations. However, they … also identify international trade and local economic policy heterogeneity as growing centrifugal forces. …