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CAtrade Consulting > Synchronized factories: Latin America and the Caribbean in the era of global value chains

Synchronized factories: Latin America and the Caribbean in the era of global value chains

Synchronized factories:
Latin America and the Caribbean in the era of global value chains


Summary

The joint participation of different countries in the design, production, and distribution of both goods and services between countries allows them not only to create new opportunities to diversify their production and trade, but also to receive some of the profits associated with the manufactured good within the chain, without having to master all the stages of the good's production.

Global value chains (GVCs) play a crucial role in the development of Latin America and the Caribbean (LAC). This report from the Inter-American Development Bank (IDB) provides an overview of the level of participation of Latin American economies in GVCs compared to other regions of the world and offers a set of proposals to address the challenges facing the region in this area. Among these are:

  • The need to modernize transportation and logistics infrastructure, maintain low levels of protection, and foster regional integration.
  • Tariff escalation limits LAC countries' access to higher value-added segments in production chains.
  • The offshoring of services also represents an opportunity to diversify exports.
  • Exporting GVC-related services not only requires a high-quality workforce, but also a sufficient number of available workers.
  • Access to global production chains can be severely hampered by information failures.
  • Public policies can help reduce information problems and improve visibility and credibility.
  • Companies in LAC that cannot integrate into global production chains on their own can benefit from policies that promote collaboration or consolidation.
  • For some local companies, especially SMEs, it is very difficult to integrate into GVCs by exporting directly. However, they may gain access by becoming local suppliers to international companies based in their countries.

Reference

Fábricas sincronizadas

Blyde, J. (2014). Synchronized Factories: Latin America and the Caribbean in the Era of Global Value Chains. Recovered from: http://publications.iadb.org/bitstream/handle/11319/6668/FLagship-2014-ESPANOL.pdf?sequence=2

Note: summary made by CATRADE Grupo Consultor en Comercio Exterior.