The internationalization of production processes – the so-called global value chain (GVC) revolution – has opened a new pathway to industrial development. Nations initially join GVCs to become competitive internationally, and then go on to industrialize by intensifying their participation in the networks. To date, however, few Latin American nations have joined the GVC revolution; this needs to change. The brutal fact is that Latin America cannot industrialize the old way in a time when China and other nations are doing so the new way – by combining advanced know-how available in GVCs with cost effective labor to produce goods at unbeatable quality-price ratios. This report marshals the best available evidence and makes sense of the rapidly evolving economic thinking on the issue. It then applies this analysis to today’s policy challenges in the Latin American context. That’s why this report is a must-read for policy makers and scholars around the world but especially those concerned with the region’s economic development.
Professor of International Economics, Graduate Institute, Geneva
This is a fascinating and page-turner report. While providing a comprehensive assessment of the indicators aimed at measuring GVC-related issues, from degree of integration to impacts, it remains focused on the implications for policy. The report highlights, through the lenses of GVC, the weak spots of the Latin American economies - from dependency to primary exports to weak infrastructure. It points that the region’s most logical response to its shortcomings is to forge ahead to achieve true globalization of its economies, rather than focus on strengthening regionalism; a message that has a critical value particularly for Europe. In this way, the report while addressing Latin American issues appeals to a much broader audience, making it a must read for scholars and practitioners.
Filippo di Mauro
Senior Adviser, European Central Bank
This IDB report fills a void in the discussion on future development strategies in Latin America highlighting the growing importance of global value chains (GVCs) as a powerful mechanism in the global economy. It shows how GVCs enable participating countries and firms to achieve significant gains in productivity, diversification of production, and ultimately, greater economic growth.
This book not only explains the reasons for the low participation of Latin America in GVCs, but more importantly sets forth a policy agenda that the countries of the region should implement to improve their participation in these supra-national chains. In doing so, the book takes a new and innovative approach, which will prove extremely useful for policy makers in Latin America today.
President of CIEPLAN. Former Minister of Finance and former Foreign Minister of Chile