The economic growth generated by best business practices, implemented since 1990, allowed more than 1,000 million people to get out of poverty, according to World Bank estimates.
Their recent research shows that trade has boosted incomes by 24% globally since 1990, and by 50% for the bottom 40% of the population. That is why in the manuals of economic and social reactivation there is a special chapter for trade.
(See: OECD: Trade Committee gives support to the country’s trade policy).
In recent decades, the countries of Latin America various measures were promoted to promote both regional and global trade. These policies were reflected in significant falls in the tariffs applied to foreign trade, going from 12% to 7% in the region, in addition to having as a counterpart an increase in investment and economic growth.
Nevertheless, intra-regional trade has stagnated. This has remained around 15% of total exports since the mid-1990s, with little variation over time, according to the Economy and Development Report (RED 2021) by CAF (Development Bank of America). Latin, entitled: ‘Pathways for integration: trade facilitation, infrastructure and global value chains’.
In contrast, in Europe intra-regional trade has values close to 60% of the total, while in North America it reaches 45% and in East and Southeast Asia it reaches 35%.
“2022 will once again be a year with diverse challenges, brought about by the climatic changes that affect our countries, such as the drought, the logistics crisis, the hardening of external conditions and the less margin for fiscal maneuver, for which once again decisive, coordinated actions and the taking of opportunities that may occur within the impulse of regional integration and international insertion”, affirmed the Minister of Finance of Paraguay, Óscar Llamosas, during the presentation of RED 2021 in Asunción, at the beginning of last March.
(See: Losses for trade due to the absence of the National Team in Qatar).
Paraguay recognizes the importance of trade for economic and social reactivation and as a fundamental piece to promote development, with initiatives in the area of infrastructure such as the Bioceanic Corridor project, which will transform the Western Region into an international logistics center by becoming the shortest path between the Chilean port on the Pacific Ocean and the Brazilian port on the Atlantic Ocean.
RED 2021 proposes to work on three pillars: the facilitation of trade, transport infrastructure and electrical interconnection, and the harmonization and simplification of regulations to promote productive integration and the participation of companies in regional and global value chains, such as rules of origin.
“We are the bank of economic recovery, so we will continue to support regional integration through trade. We are going to work more on comprehensive sustainable infrastructure in road, energy and digital matters; we want to promote border trade and intra-regional tourism with a renewed agenda on climate change and biodiversity; and finally the development of a single digital market in Latin America and the Caribbean”, stated Sergio Díaz-Granados, Executive President of CAF.
(See: Shopkeepers, despite informality, with more innovation).
Regional and global value chains are a strategic tool that Latin America and the Caribbean can strengthen to increase their presence in international trade, especially after the opportunities identified with the crisis in supply and logistics chains generated by the pandemic.
Regional and global value chains are a strategic tool that Latin America and the Caribbean can strengthen.
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In this sense, a study of the Andean Community (CAN) made it possible to identify three chains with the potential to encourage their productive integration: processed animal feed, chemicals (cosmetics, cleaning products, pesticides and others for agricultural use) and computer services.
(See: Creation of companies and confidence in the sectors increased in 2021).
“We are at a time that requires taking on the challenges that lie ahead in order to regain confidence in the future, confront inequality and implement coordinated policies among countries with the support of institutions such as CAF”, pointed out the secretary general of the Andean Community, Jorge Hernando Pedraza.
The trade chapter is written in the manual and there is a consensus on its relevance to improve the well-being of the population and the productivity of the countries. There is also a willingness to work together between governments, the private sector and multilateral organizations to move from theory to action.
(See: The keys to a good start for industry and commerce in 2022).
If this opportunity is seized, it will be possible to say in a couple of decades that another 1,000 million people have been lifted out of poverty thanks to trade.
CAF
*Visions of Development is a section promoted by CAF (Development Bank of Latin America) that analyzes the main development issues in the region.
