GLOBAL PRODUCTIVITY
CHAPTER 5
299
FIGURE 5.19 Drivers of productivity growth in LAC A sustained period of contracting investment growth in LAC has held back productivity gains in recent years. Lower R&D spending relative to other regions, weak trade linkages in several large economies, and inadequately educated workers also hinder productivity growth. A. Investment growth
B. Research and development spending
2020Q1
2019Q1
2017Q1
Percent Argentina 12 Peru 8 4 0 -4 -8 -12
2017Q1
2016Q1
2015Q1
2014Q1
2013Q1
2012Q1
2011Q1
Percentage points Brazil Mexico 12 Colombia Chile 8 Growth (RHS) 4 0 -4 -8 -12
C. Trade, 2015-17 Percent of GDP 100
Percent of GDP 0.8 Interquartile range
Median
0.6 0.4 0.2 0.0 2006-12
2013-17 LAC
2006-12
2013-17
EMDEs
D. Firms indicating inadequately educated workers as their biggest obstacle EMDE average
Percent 15 12
60
9
40
6
20
3
0
0
BRA ARG COL URY DOM ECU PAN PER GTM JAM CRI CHL BOL PRY SLV HND MEX NIC
80
Interquartile range Median
2006-12
2013-18 LAC
2006-12
2013-18
EMDEs
Sources: Haver Analytics; World Integrated Trade Solution; World Bank (Doing Business, Enterprise Surveys, and Global Financial Development Database). Note: EMDEs = emerging market and developing economies; LAC = Latin America and the Caribbean; R&D = research and development. A. Bars show investment-weighted averages. Last observation is 2020Q1. Investment growth is year-on-year. B. Sample includes 16 economies for LAC and 94 for EMDEs. C. Bars show 2015-17 average of exports plus imports as a share of GDP. Sample includes 96 EMDEs. BRA = Brazil; ARG = Argentina; COL = Colombia; URY = Uruguay; DOM = the Dominican Republic; ECU = Ecuador; PAN = Panama; PER = Peru; GTM = Guatemala; JAM = Jamaica; CRI = Costa Rica; CHL = Chile; BOL = Bolivia; PRY = Paraguay; SLV = El Salvador; HND = Honduras; MEX = Mexico; NIC = Nicaragua. D. Sample includes 30 LAC economies and 113 EMDEs.
than in the EAP and ECA regions. Even the LAC countries most integrated in GVCs (Chile, Costa Rica, and Mexico) are not among the most integrated EMDEs and may suffer the economic consequences of GVC disruptions as a result of COVID-19 (OECD 2018b; World Bank 2020a). The opportunity for regional productivity gains through trade is further hindered by the structure of intra- and extraregional trade relationships. Although LAC countries are party to numerous trade agreements, there is little harmonization of rules of origin and nontariff measures across agreements, and there is no region-wide agreement. These characteristics result in fragmentation of trading priorities and, together with weak diversification of traded goods in many countries, limit the development of intraregional GVCs. Rules of origin imposed under preferential trade agreements in the region are estimated to negate more than 15 percent
