1 minute read
Key messages
Caribbean
Ana Fernandes, Gaston Nievas, and Deborah Winkler
KEY MESSAGES
• Trade in Latin America and the Caribbean is low in relation to the region’s economic size, and the region is less open to trade than other regions at comparable levels of development. • Latin American and Caribbean exports are concentrated in commodities and food, with some limited manufacturing and, for Mexico, advanced manufacturing and services. • Both backward participation in global value chains (the use of imported inputs for production for export) and forward participation (the export of inputs used in production for the importing country’s exports) are limited in
Latin America and the Caribbean. • Latin America and the Caribbean is disadvantaged by its geographical distance from global value chain (GVC) hubs, average domestic market size, and endowments of low-skilled labor and capital. • Th ese characteristics, along with Latin America and the Caribbean’s sectoral specialization in commodities and food exports, explain the region’s low average backward GVC participation and several Latin American and Caribbean countries’ high forward GVC participation, though diff erent patterns exist within the region. • Deep trade agreements present an avenue to overcome geographical remoteness, expand eff ective market size, and increase access to imported services that could support GVC participation and upgrading in Latin America and the Caribbean. Th ey can also improve domestic institutions, further strengthening GVC participation.
