Insights of spatial economics tell that the interaction between scale economies and transport cost may generate agglomeration of industries to small number of core locations while leaving the rest as periphery. When this proposition is applied to the case of regional economic integrations such as Mercosur, political factors should be taken more seriously because the marginalized country may break up the integration. Our analysis shows that the automobile industry in Mercosur has sought to maintain production sharing between Argentina and Brazil, even though the market potential of the latter might be bigger. This prevented the Mercosur from potential conflicts. The intra-regional pattern of specialization has evolved showing automakers' high capacity of adaptation to drastically changing macroeconomic environment. We do not support the pessimistic argument for Mercosur based on the declining share of the intra-regional trade, because the rising extra-regional exports of the automobile sector will not dispense the platform of the Mercosur production sharing structure.

This study focuses on power sector reforms in Brazil and assesses the policy implications and lessons for the other developing countries. In Brazil, power sector reform started in 1995. The major concern of the power sector in Brazil was how to resolve the problem of extremely high dependence on hydropower sources and to attract investment for thermal power generation. However, the market-oriented approach adopted in the late 1990's turned out to be non-effective. The electricity crisis in 2001 evoked very active public debates about how Brazil should create a favorable environment for supply security and quality, private investment and competition, as well as a reliable regulatory framework. After the Lula administration took office, Brazil shifted its electricity policy to emphasize long-term stability based on Law No. 10847 and Law No. 10848 enacted in March 2004. Power sector reforms in developing countries should be accompanied by continuous investment in infrastructures since the countries will need to respond to rapid economic growth. The lessons obtained from Brazil's experience may very well contribute to development of an electric sector reform policy in developing countries. However, when the actual introduction of reforms is begun, it will be necessary to use a case-by-case approach according to specific circumstances in individual countries when considering the reforms necessary.

The main problem of Latin American countries under an ‘open regime’ is said to be its low growth in ‘technological capability’, since foreign imports replace domestic technology. On the other hand, several recent theoretical contributions to the literature have demonstrated that, under the current global production system, developing countries have a better chance to acquire ‘competitiveness’. This paper will look at a successful export sector in Chile, the salmon farming industry, to examine whether the above propositions are valid, and explores the factors needed for further development in developing countries, using preliminary results from a firm-level survey conducted by the author together with some secondary information.