In my thesis, I try to find out to what extent does the cooperation and rivalry between Argentina and Brazil influence the development of Mercosur. In the first part of my thesis I am looking for the reasons that lead to the creation of Mercosur and I conclude that the cooperation between Argentina and Brazil was the key factor that lead to the creation and the development of Mercosur. In the next part of the thesis I support the claim that rivalry between the two countries had an important impact on the development of the integration of the Mercosur countries on a number of concrete examples of disputes between Argentina and Brazil. Lastly, I put the importance of the two countries in the economic context of other countries in Mercosur by analyzing the data from the World Bank and ALADI and show their weight in Mercosur.