{
  "title": "Trading Out of Trouble in Latin America",
  "publication": "IMF Blog, November 4, 2015",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2015/11/04/trading-out-of-trouble-in-latin-america",
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  "summary": "Authors: Natalija Novta, Fabiano Rodrigues Bastos",
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    {
      "heading": "Context and overview",
      "content": "- Authors: Natalija Novta, Fabiano Rodrigues Bastos\n- Publication date: November 4, 2015\n- Versions available: Español and Português\n- Central finding: Most countries in Latin America and the Caribbean “undertrade” relative to predictions from standard models, an entrenched problem over almost a quarter of a century driven in part by geography and a legacy of protectionist policies.\n- Policy implication: Greater trade — both within the region and with the rest of the world — could help revitalize growth, but trade integration and agreements are not magic bullets; complementary reforms to raise competitiveness are essential."
    },
    {
      "heading": "Weak trade: methodology and main findings",
      "content": "- Method: Identified trade intensity gaps (export gaps) for the period 1990–2013 by comparing actual exports to predicted exports from a model using variables such as geographic distance, economic size, and historical or cultural features. The unexplained difference is the export “gap.”\n- Key findings:\n  - On average, Latin American countries are undertrading compared with the rest of the world.\n  - South American countries show especially pronounced undertrading.\n  - Latin America has not improved its measured export performance over the past two decades, in stark contrast with emerging and developing Asia.\n  - Findings apply to both gross exports and value-added exports.\n  - Asia overtrades in both gross exports and value-added exports, indicating its strong gross export performance is not driven solely by foreign content of exports."
    },
    {
      "heading": "Regional differences in export performance",
      "content": "- Mexico:\n  - Overtrades in gross exports.\n  - Shows much weaker performance in value-added exports.\n  - Results driven overwhelmingly by bilateral flows with the United States and strengthening supply chain linkages (for example, in the auto industry).\n- Chile:\n  - Strong trade performer.\n  - Performance heavily influenced by links with China; Japan and Korea also important destinations.\n  - Has been able to increase the volume of exports despite a narrow export base, unlike other commodity exporters in the region.\n- Argentina, Brazil, Colombia:\n  - Display the weakest trade performance in Latin America.\n  - Argentina and Brazil: weak exports to major advanced economies, particularly the United States, are key contributors.\n  - Colombia: weak exports to Mexico and Brazil play an important role.\n- Venezuela:\n  - Identified as an “overtrading” country in value-added terms because it exports more oil, which has high domestic content, than predicted by fundamentals.\n- Other countries:\n  - Display small deviations from export performance predicted by fundamentals."
    },
    {
      "heading": "Global value chains and trade agreements: impacts and limitations",
      "content": "- Global value chains:\n  - Stronger country-level integration into global value chains leads to improved bilateral performance in both gross and value-added exports.\n  - The direct short-term impact is economically small.\n  - Long-term gains require leveraging GVC trade for knowledge spillovers and innovation to achieve sustained productivity growth.\n- Trade agreements:\n  - Results are mixed; benefits hinge on design and implementation characteristics of accompanying reforms and the agreements themselves.\n  - Comprehensive agreements that reduce tariffs and non-tariff barriers, harmonize regulatory frameworks, and involve large advanced and emerging economies are more likely to have positive medium-term effects.\n  - Regionally-protected trade blocks appear less promising."
    },
    {
      "heading": "Policy recommendations and avenues for improvement",
      "content": "- Prioritize efforts to penetrate large markets, particularly in advanced economies, to increase market share in competitive environments.\n- Pursue bolder structural reforms to increase export competitiveness and allow firms to penetrate large markets.\n- Seek greater integration into global value chains but focus on translating integration into sustained productivity growth via learning spillovers and greater intra-industry trade.\n- Approach trade agreements strategically:\n  - Favor comprehensive, multi-regional agreements that reduce tariffs and non-tariff barriers and harmonize regulation.\n  - Guard against the risk of being excluded from multi-regional deals as the world trade landscape changes rapidly.\n- Remain realistic about the potential for significant improvements given geographic constraints and historical legacies; policy design and implementation matter critically.\n\nSource: Trading Out of Trouble in Latin America (IMF blog), November 4, 2015\n\n---\n\n Content in this bundle\n\n- O comércio internacional pode virar o jogo na América Latina\n  - O comércio internacional pode virar o jogo na América Latina (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - O comércio internacional pode virar o jogo na América Latina (PDF){rel=\"external\" type=\"application/pdf\"}\n- Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015\n  - Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- global value chain trade\n\nSource: https://www.imf.org/en/blogs/articles/2015/11/04/trading-out-of-trouble-in-latin-america"
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    "Authors: Natalija Novta, Fabiano Rodrigues Bastos",
    "Published: November 4, 2015",
    "Authors: Natalija Novta, Fabiano Rodrigues Bastos",
    "Publication date: November 4, 2015",
    "Versions available: Español and Português",
    "Central finding: Most countries in Latin America and the Caribbean “undertrade” relative to predictions from standard models, an entrenched problem over almost a quarter of a century driven in part by geography and a legacy of protectionist policies.",
    "Policy implication: Greater trade — both within the region and with the rest of the world — could help revitalize growth, but trade integration and agreements are not magic bullets; complementary reforms to raise competitiveness are essential.",
    "Method: Identified trade intensity gaps (export gaps) for the period 1990–2013 by comparing actual exports to predicted exports from a model using variables such as geographic distance, economic size, and historical or cultural features. The unexplained difference is the export “gap.”",
    "Key findings:",
    "Mexico:",
    "Chile:",
    "Argentina, Brazil, Colombia:",
    "Venezuela:",
    "Other countries:",
    "Global value chains:",
    "Trade agreements:",
    "Prioritize efforts to penetrate large markets, particularly in advanced economies, to increase market share in competitive environments.",
    "Pursue bolder structural reforms to increase export competitiveness and allow firms to penetrate large markets.",
    "Seek greater integration into global value chains but focus on translating integration into sustained productivity growth via learning spillovers and greater intra-industry trade.",
    "Approach trade agreements strategically:",
    "Remain realistic about the potential for significant improvements given geographic constraints and historical legacies; policy design and implementation matter critically.",
    "**O comércio internacional pode virar o jogo na América Latina**",
    "**Regional Economic Outlook: Western Hemisphere - Adjusting Under Pressure; October 2015**",
    "[global value chain trade](http://www.imf.org/external/pubs/ft/fandd/2015/09/delatorre.htm)"
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