ABSTRACT
This chapter argues that Southern Common Market (MERCOSUR) has proven more successful than conventional theories on regional integration lead people to expect, but displays certain particularities, such as its very limited institutional design and a troublesome record regarding the domestic implementation of regional decisions. In the case of the MERCOSUR, the most prominent theories in this regard seem to lack explanatory power. Neither the emergence nor the institutional development and outcomes of MERCOSUR are consistent with the assumptions made by intergovernmentalism and neofunctionalism. Indeed, during the first years of the automatic tariff reductions, intra-regional trade grew by about 27 percent annually, much faster than trade with the rest of the world. The admission of Venezuela could weaken the power of interpresidentialism, as it adds a potential new cleavage and complicates the balance of powers. Brazil's shift in trade priorities away from the region reduces the hegemon's incentive to invest in MERCOSUR.
