manufacturing in latin america and the caribbean region (lac) faces severe competitive stresses as it integrates into the global economy. it is not, on the whole, coping well. though it was the first region in the developing world - in the post-war era - to liberalize on international trade and investment flows and had the most advanced industrial base, it failed to tap fully the opportunities offered. as a result, it has steadily fallen behind the most competitive economies in the developing world, the tigers of east asia. what is behind lac¿s under-performance? the dominant view in the region puts emphasis on the legacy of import substitution, macroeconomic mismanagement and on a costly "business environment". although important, these factors do not seem to tell the whole story. the heavy emphasis on "government failures" has led policymakers to overlook key market failures that stand on the way to sustained productivity growth, increasing technological capability and greater com...
