Regional integration and value chains in a challenging external - PowerPoint PPT Presentation

Regional integration and value chains in a challenging external environment

International context 1. International conditions are slowing regional trade

Global output and trade are growing have grown more slowly since the 2008-2009 crisis Annual GDP growth and exports by volume (Percentages) a) GDP b) Goods exports ,10 ,9 ,20 ,8 ,7 ,15 ,6 ,5 ,10 ,4 ,3 ,5 ,2 ,1 ,0 ,0 World United Eurozone LAC China World United Eurozone LAC China States States 2003-2007 2011-2013 2014 2003-2007 2011-2013 2014 Fuente : ECLAC, on the basis of data from ECLAC and International Monetary Fund, World Economic Outlook , October 2014. Data for Latin America are ECLAC estimates.

Post-crisis, the difference between the growth rates of global exports and output has narrowed considerably World: average variation in exports and GDP, selected periods (Percentages) 10.0 9.0 8.0 7.0 5.7 6.0 5.0 1.9 4.0 3.0 3.0 2.5 1.1 2.2 2.0 1.0 0.0 1950s 1960s 1970s 1980s 1990s 2001-2007 2011-2014 Exports GDP Source: ECLAC, on the basis of data from WTO, and United Nations projections for 2014.

The slower global trade growth is evident in exports of both goods and services Annual variations in the value of global exports of goods and services, 2000-2008 and 2010-2013 Period I 2000-2008 Goods Services Period II 2010-2013 I (12.4%) I (12.6%) II (6.7%) II (5.8%) Primary products Natural-resource- Low- and medium- High-tech I (17.4%) based manufactures tech manufactures manufactures I (14.8%) I (11.9%) I (8.0%) II (4.9%) II (7.0%) II (5.7%) II (4.7%) 5 Source: ECLAC, on the basis of data from WTO and COMTRADE.

Commodity prices are falling, but remain above historic levels Latin America and the Caribbean: prices of main export products, 2000-2018 (Index: January 2008=100) Source: ECLAC, on the basis of World Bank, The Economist Intelligence Unit and IMF.

Exports by developed countries have failed to gain momentum since the crisis Advanced and developing countries: index of goods exports by volume (Index: January 2008=100) 140 130 120 110 100 90 80 70 2008m01 2009m01 2010m01 2011m01 2012m01 2013m01 2014m01 Advanced countries Developing countries Source: ECLAC, on the basis of World Trade Monitor of the CPB Netherlands Bureau of Economic Policy Analysis.

The slowdown in the North is dragging down export growth in the South Structure of global exports by major world regions: 2009 and 2013 2000 South- 2013 South- North North- North 20% North 19% 34% South- South North- 14% South- North South 51% North- North- 28% South South 18% 16% Global trade: annual variation in export values, 2000-2013 (Percentages) South- South- North-North North-South South North World 2000-2009 5.4 8.1 13.3 6.8 7.5 2010 12.3 25.7 36.3 28.1 22.5 2011 15.2 18.6 32.5 21.4 21.0 12.0 17.7 -4.6 0.8 4.8 2012 3.9 -0.4 3.0 3.1 2.6 2013 Source: ECLAC, on the basis of United Nations, COMTRADE.

The export stagnation in Latin America and the Caribbean has now lasted three years Latin America and the Caribbean: growth in goods exports, 2000-2014 (Percentages) 30 30.0 23.5 20 20.0 10 10.0 1.6 -0.2 0.8 0 0.0 -10 -10.0 -20 -20.0 Volume Price Value -30 -30.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: ECLAC, on the basis of official information. The figures for 2014 are ECLAC estimates.

2. Impact on the region

Exports by Mexico and Central America will be the fastest-growing in 2014 (in subregional terms) Latin America and the Caribbean: annual variation in goods trade by volume, price and value, 2014 (Percentages) Exports Imports 8 6 4.9 6 4 4 2.3 1.4 2 0.8 2 -0.6 0 0 -1.5 -1.7 -2 -2 -2.3 -4 -2.8 -3.6 -4 -6 Volume Price Value Volume Price Value -6 -8 Mexico and Central America Latin America and the Caribbean Andean Community South America MERCOSUR Mexico and Central America Andean Community Latin America and the Caribbean South America MERCOSUR Source: ECLAC estimates, on the basis of official information.

The poor performance of regional trade is due mainly to declines in trade with the European Union and within the region itself Latin America and the Caribbean: estimated annual variation in goods trade value, by trading partner, 2014 (Percentages) Exports Imports United States 3.4 China 5.4 China 2.4 United States 3.2 World -0.6 Rest of Asia 2.1 Rest of Asia -2.6 World 0.8 European Union European Union -0.7 -4.0 Latin America and the Caribbean -4.9 Latin America and the Caribbean -4.8 -7 -5 -3 -1 1 3 5 7 -7 -5 -3 -1 1 3 5 7 Source: ECLAC estimates, on the basis of official information.

In 2014, agricultural exports will be the fastest-growing Latin America and the Caribbean: estimated variation in goods trade value, by major sector, 2014 (Percentages) Exports Imports Fuels 3.0 Agricultural products 3.4 Intermediate inputs 2.2 Manufactures 1.8 Total imports -0.6 Total exports 0.8 Consumption goods -4.9 Mining and oil -2.2 Capital goods -6.1 -8 -6 -4 -2 0 2 4 -3 -2 -1 0 1 2 3 4 Source: ECLAC estimates, on the basis of official information.

Latin American and Caribbean countries: projected variation in trade value, 2014 Exports Imports Paraguay ,14.1 Bolivia (Plur. State of) ,6.5 Uruguay ,13.6 Uruguay ,5.9 Ecuador ,9.3 Panama ,5.5 Bolivia (Plur. State of) ,8.6 Guatemala ,5.5 Nicaragua ,7.4 Colombia ,3.9 Guatemala ,6.7 Mexico ,2.3 Mexico ,5.0 Costa Rica ,1.9 Cuba ,4.3 Cuba ,1.6 Costa Rica ,3.6 Honduras ,1.3 Honduras ,3.4 El Salvador ,0.4 Dominican Republic ,3.1 Ecuador ,0.4 Panama ,1.8 Nicaragua -,0.2 Chile ,0.8 LAC -,0.6 LAC ,0.8 Dominican Republic -,0.6 Venezuela (Bol. Rep. of) -,0.8 CARICOM -,1.6 El Salvador -,1.5 Peru -,2.3 Colombia -,1.8 Venezuela (Bol. Rep. of) -,2.8 Brazil -,3.0 Brazil -,3.2 CARICOM -,4.3 Paraguay -,4.9 Argentina -,5.2 Argentina -,6.6 Peru -,10.6 Chile -,7.0 -15 -5 5 15 -15 5 Source: ECLAC estimates, on the basis of official information.

3. Participation and upgrading in value chains

What is inclusive trade? A type of trade that: • promotes growth and productivity • reduces structural heterogeneity • improves well-being for the majority (employment and wages) • reduces inequality

Potential benefits of international value chains for inclusive development • Greater value added A. Upgrading • Broader access to quality intermediate goods • Better human capital and wages • Larger market (international) • Technology transfer B. Participation of SMEs • Job creation • Provided by large firms C. Access to financing • … or banks (lower lending risk associated with being in a GVC) These benefits depend crucially on cross-cutting policies

A. Example of innovation and upgrading: synthetic fibre sportswear chain in El Salvador Recommendations for upgrading: • Create a centre of innovation and technological development • Improve the educational profile of technical staff • Better support for public innovation bodies • Work on the country brand Source: R. Padilla Pérez (ed.), Strengthening value chains as an industrial policy instrument. Methodology and experience of ECLAC in Central America , Libros de la CEPAL, No. 123 (LC/G.2606-P), Santiago, Chile, Economic Commission for Latin America and the Caribbean (ECLAC), 2014. United Nations publication, Sales No. E.14.II.G.9.

B. Example of SME participation: the fine aromatic cocoa value chain in Ecuador Impact of the SME programme, 2006-2010 a) Income per hectare of the b) Other income of participant and participating groups non-participant farms, 2010 (Dollars) (Dollars) 4000 500 3500 450 3000 400 2500 350 2000 300 1500 250 1000 200 500 150 0 Participants Non-participants Participants Non-participants 100 50 0 2006 2010 2006 2010 KALLARI APROCANE KALLARI APROCANE Source : Hernández, R. A., J.M Martínez-Piva and N. Mulder (2014), Global value chains and world trade: Prospects and challenges for Latin America , ECLAC, Santiago.

C. Better access for financing for SMEs in value chains: dairy produce in Argentina • Dairy processing firm “La Serenísima ” (5,000 employees) created guarantee fund in 2009 : – For 1,046 suppliers (a third of the total) – Suppliers: 65% are small dairy farms – Guarantees increased between 2002 and 2009: • from 743 to 1.345 in number • from US$ 1.8 million to US$ 5.5 million in amount

International chains in the textile and clothing industry in Peru, 2012 Suppliers of textile inputs to Peru Exports of textiles and clothing by Peru Destination of Peru’s textile and clothing exports Source : Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of United Nations Commodity Trade Statistics Database (COMTRADE).