This article aims to address a fundamental question for analysts and students of MERCOSUR: what explains the bloc's survival despite its recurrent crises and frequent pessimistic forecasts predicting its collapse? It argues that the maintenance of co-operation after 1999, when the economic and political economy rationale of the project had almost disappeared, is best understood in terms of the convergent strategic interests of MERCOSUR partners. This convergence of interests in the continuity of the regional regime reflects three types of strategic incentives. First, defensive considerations reflecting external forces and a shared sense of vulnerability vis-à-vis the external environment have provided the main motivation for partners to engage in negotiations and attempt to move the process of integration forward. Secondly, the offensive incentives faced by Brazil, given its relatively stronger position within the region have also worked to foster regional co-operation. But besides these power considerations, the sustainability of co-operation has been at least partially assisted by an emerging process of socialisation among executive officials taking place within regional institutions. These processes of increased interaction and enmeshment have reinforced interests in regional integration, giving way to positive incentives to maintain MERCOSUR.

This article seeks to explain the highly interventionist Brazilian automobile policy of 1995, which drastically departed from the neoliberal principles guiding Brazilian economic policy at the time. This seemingly inconsistent policy stemmed from two overlapping bargains. The first, between the private sector and the government's developmentalist, and hence more permeable elements, shaped the policy's content and design. A second, more crucial intrastate bargain pitted the defenders of the previous development model against the team of neoliberal, technocratic economists who had centralized economic decisionmaking authority since mid‐1993. These economists' support for the automobile policy must be understood as a response to the macroeconomic and political challenges they faced in 1995. This study highlights the importance of examining the undisclosed actions of the state and the role of intrastate cleavages in political economy outcomes.

This report offers recommendations on how to improve the design and activities of trade and investment promotion institutions in Nepal, with the goal of enhancing the country's export competitiveness and ability to attract export-oriented FDI. There is room for improvement in the design of and coordination mechanisms among Nepal's trade and investment promotion institutions. Often, activities carried out by trade promotion institutions in Nepal are not aligned with good practices and fall short of their mandate of addressing informational asymmetries and other market failures. There are several agencies whose mandate is to promote trade (in goods or in tourism-no active promotion of other services exports), or investment (agencies within the Department of Industry, and the Investment Board of Nepal (IBN)), but with little coordination. In a context in which trade and investment globally are strongly linked, coordination among these agencies should be paramount. This note examines four case studies of "best practices" in the promotion of exports and export-oriented investment-Costa Rica, Jamaica, Colombia, and Latvia. It also discusses an example of successful promotion and development of the links between the tourism sector and exports, Mauritius, which offers some lessons for the case of Nepal. Based on these international best practices, we draw a number of policy recommendations for Nepal: o Streamlining business requirements, increasing accountability, and increasing the transparency and predictability of administrative procedures. o Eliminating barriers to foreign investment entry and other restrictions to the operation of investors.

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