Internationalization and technology in MERCOSUR

The Southern Common Market (MERCOSUR), widely recognized as one of the most advanced regional integration schemes worldwide, is increasingly attractive to multinational enterprises and also very active in outward investments, despite persistent innovation and competitiveness gaps. In this paper we analyse internationalization and technology trends in mercosur in relation to trade, the activities of multinational enterprises (MNEs) and the features of national systems of innovation. Our empirical findings, based on traditional gravity models, show the impact of foreign direct investment (FDI) (inward and outward) on exports, classified according to their technological content. Income distribution, which shapes the institutional characteristics of MERCOSUR countries, is specifically addressed as a proxy for the structural aspects of MERCOSUR countries. The findings confirm that technological and internationalization capacities -both as host and home countries of FDI- influence trade within the bloc.