andean community

8/8/2019 Andean Community

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ANDEAN COMMUNITY


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Statisticsy Total population covered 98 million

y Total area covered 47,00,000 square kilometer

y Gross Domestic Production US$ 745.3 billion

(2005)


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Introductiony Trade bloc established in year 1969.

y Headquarted in Lima, Peru.

y Establishing members

y Bolivia

y Columbia

y Ecuador

y Peru

y Initially called Andean Pact and converted toAndean Community after announcement ofCartagena Agreement in 1996.


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Historyy Andean Pact was largely based on European Union

model.

y 1969 Original Andean pact was formed

y 1973 Pact gained its 6th member Venezuelay 1976 Chile withdrew its membership

y 2006 Venezuela withdrew its membership


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Objectivesy Internal tariff reduction

y Common external tariff

y Common transportation policy

y Common industrial policy

y Concession for small members like

y Bolivia and Ecuador


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Major Eventsy Andean pact collapsed by mid 1980s

y The countries dealt with low economic growth andhigh unemployment

y In 1990 Galapagos declaration was formedy To reduce the internal tariff levels

y Andean pact entered into a negotiation withMERCOSUR

y They established a South American free trade area

y These negotiations broke down in 1999


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Impactsy Zero Intra-region tariff since 1993 (except Peru)

y Intra-region exports grew 47 TIMES (1970-2000)while exports to ROW grew 10 times.

y

Common External Tariffs under negotiation: fourlevels expected: 0, 5, 10 and 20 %

y System of Price Bands applied to 13 agriculturalcommodities (since 1995)


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Andean Countries: Economyy Economy of member countries is not homogenous.

y Each country shows a marked dependency oncertain specific economic sectors.

y Manufacturing plays an important role foreconomies of comparatively advanced countries ofgroup like

y Chile

y Columbiay Peru


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Boliviay The Bolivian economy grew, between 1965 and

1969 at an annual rate of 6.3%.

y Most prominent sector Agriculture, provides

employment for over half of the labor force,expanded at an average rate of only 2.6%.

y Othe important sectors

y Industry

y Miningy Hydrocarbons

y Electric power


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Bolivia(contd.)y Poor performance of agriculture resulted in fall of

share in GDP, from 28.5% in 1965 to 24.18% in1969.

y

Rice and sugar production increased at anapproximate annual rate of 11%; and livestock,cotton, and coffee showed healthy improvements inthe late 1960's.

y

The total f,o,b. value of mineral exports rose to 21 %in 1969.


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Bolivia(contd.)y Most dynamic sector Hydrocarbons indicated by

the increase of petroleum export earnings from $0.7million in I965 to US$28.4 million in I968.

y

Manufacturing sector Contribution in GDPy 1965-68 7.6%

y 1969 14.9%

y Exports rose at an average rate of 8.6% in the

I965-69 period to $l8o million, compared to an8.1 % rate of growth of imports which reachedan estimated $220 million.


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Chiley The GDP growth of the Chilean economy showed a

slight recovery in 1969 but again declined in year1970.

y

In 1970 there was a growth of 2.1%, compared to3.5% in 1969 due to severe drought.

y Agriculture sector grew with an annual rate of 3.3%during 1965-1969 but maintained constant share in

GDP to 8.5%.


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Chile (contd.)y Manufacturing contributed 27.2% of GDP in 1969,

compared with 26.7% in 1965 and grew at 4.3%during this period.

y

Protective tariffs had been established to protect thenation al manufacturing industries.

y While labor productivity Increased by l4 % in 1965-1669 real wages increased 4l % over the same

period.


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Chile (contd.)y Mining accounted for 12% share in GDP during

1965-1969.

y Due to fall in copper prices, Chile's balance of

payments deteriorated during the last half of 197Oand the first half of 1971.

y In 1969 this sector brought into the economy $65.5million in export earnings.

y Agricultural and manufacturing exports increased by$13 million in the first half of I97O over thecorresponding period in 1969


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Colombiay From 1965 to 1969 Colombia's real GDP grew at an

average rate of 5.2 % a year, a slight improvementover the annual rate of 4.9 %attained in the

preceding five-year period.y In 1970 the growth rate reached an unprecedented

7%.

y Agriculture Most important sector - Accounts for

about 30% of the national GDP and employsapproximately 45% of the total labor force.

y Experienced a growth of 5.5% in 1971.


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Colombia (contd.)y "In 1965-69 the industrial sector accounted for 18.8

per cent of GDP, compared to 17.8 per cent in I96O.

y The sector's average annual growth was 5.6 per

cent in 1965-69.y Construction sector grew at 12% annually in 1965-

1969 and its share increased from 2.7% in 1965 to3.7% in 1969.

y Colombia is South America's largest producer ofgold and the world's principal source of emeralds


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Colombia (contd.)y Colombia's exports increased by l4.3 per cent during

1965-69, reaching $6l6 million in 1969, their highestlevel in the decade.

y

The minor exports category increased by 93.5 percent, with the result that their share of total exportsgrew from 19.9 per cent in 1965 to 33-6 per cent in1969.

y

Imports rose by 71 per cent in 1965-70.y In I969 Colombia had a foreign exchange deficit of

$428 million.

y In June 1970 the country had net international

reserves in the amount of $185 million.


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Ecuadory Ecuador grew at an annual average of 4,8 per cent

in 1965-69.

y Ecuador's gross industrial production, after rising

rapidly in the late 1950's and early 1960's.y Ecuador's overall economy suffered a serious

recession in the 1965-69 period.

y exports expanded slowly at an annual average rate

of 1.6 per cent in I965-69, and in fact contracted by9,3 per cent in the latter year


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