Constraints on Trade in the LAC Region
IMF Working Papers, February 16, 2024
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- Constraints on Trade in the LAC Region
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Bibliographic details
- Authors: Rina Bhattacharya, Samuel Pienknagura
- Published: February 16, 2024
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400269455.001
Overview and objective
- Authors: Rina Bhattacharya, Samuel Pienknagura
- Date: February 16, 2024
- Publication: IMF Working Papers, Working Paper No. 2024/032
- Pages: 43
- DOI: https://doi.org/10.5089/9798400269455.001
- ISBN: 9798400269455
- ISSN: 1018-5941
- Subject: Exports, International trade, Trade balance, Trade in goods, Trade policy
- Keywords preserved from source: Asia and Pacific, Caribbean, Central America, Constraints, Exports, gravity specification, Latin America and the Caribbean, merchandise goods, paper document, South America, Sub-Saharan Africa, Trade, Trade balance, Trade in goods, trade performance, Trade policy, trade policy variable
Key findings
- Aggregate trade values for the average country in the Latin America and the Caribbean (LAC) region are consistent with a standard gravity model.
- There is substantial heterogeneity in trade performance across sub-regions and product-types within LAC.
- Infrastructure and customs regulation are identified as key factors explaining undertrading in manufacturing in most sub-regions.
- Availability and quality of factors of production partly explain South America’s underperformance in manufacturing.
- Governance explains undertrading across most product groups.
- Factors of production and governance do not play a significant role in explaining undertrading in other sub-regions (outside South America for factors of production).
Methodology and empirical approach
- Documents observed trade patterns against predictions from a standard gravity model.
- Estimates an augmented gravity specification that includes proxies for:
- Quality of infrastructure
- Availability and quality of factors of production
- Governance
- Uses product-type and sub-region disaggregation to assess heterogeneity in trade performance.
Interpretations and implications
- Infrastructure deficits and customs regulation are central constraints for manufacturing trade across most LAC sub-regions.
- South America’s manufacturing underperformance is partly linked to factor endowments and their quality.
- Governance weaknesses account for undertrading across a broad set of product groups in the region.
- The relative insignificance of factors of production and governance in some sub-regions implies policy priorities should be region- and sector-specific.
Publication metadata and access
- Series: Working Paper No. 2024/032
- Issue: 032
- Volume: 2024
- Stock No: WPIEA2024032
This summary is based on the IMF Working Paper "Constraints on Trade in the LAC Region" by Rina Bhattacharya and Samuel Pienknagura (February 16, 2024).
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- Working Paper