Latin American Economic Outlook

OECD Development Centre

2072-5140 (online)
2072-5159 (print)
Next Edition: 26 Feb 2018
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The Latin American Economic Outlook is the OECD Development Centre’s annual analysis of economic developments in Latin America in partnership with UN ECLAC and CAF. Each edition includes a detailed macroeconomic overview as well as analysis on the dynamics shaping the region in the context of shifting wealth, particularly towards emerging economies. Each issue also includes an in-depth look at a special theme related to development in Latin America, taking into account the strategic challenges and opportunities the region will have in the future. Further information can be found on the website.

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Latin American Economic Outlook 2014

Latin American Economic Outlook 2014

Logistics and Competitiveness for Development You do not have access to this content

OECD Development Centre

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18 Oct 2013
9789264203648 (PDF) ;9789264203631(print)

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Latin American economies continue to present relatively stable growth but continued uncertainty with regards to the duration of the commodity boom could pose threats to medium-term growth and economic development. Latin American countries face increasing competition from emerging economies across the globe particularly in manufacturing sectors. In this context of shifting wealth, it is increasingly important to foster competitiveness and connectivity.

Improving logistics performance is particularly important as it directly impacts growth, productivity, and trade within the region and beyond. The region’s productive structure with significant concentration in natural resource and agriculture augment the importance of logistics in fostering competitiveness. Nevertheless, logistics performance in the region faces serious gaps particularly in the areas of customs performance and the availability of infrastructure. Improving these aspects will entail more and better investment in infrastructure, as well as making the most of existing infrastructure by putting in place efficient trade facilitation measures and efficient and appropriate regulatory frameworks.

Coverage is provided for Argentina, Brazil, Bolivia, Chile, Columbia, Cuba, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatamala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay, and Venezuela.

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  • Foreword

    The Latin American Economic Outlook analyses issues related to Latin America’s economic and social development. Ever since the first edition was launched at the Ibero-American Summit in November 2007 in Santiago (Chile), the report has offered a comparison of Latin American performance with that of other countries and regions in the world, sharing experiences and good practices with the region’s policy makers.

  • Editorial

    Over the course of the last decade, Latin America’s economic expansion was accompanied by significant progress in poverty reduction. Between 2003 and 2012, the region grew at an average annual rate of 4.0%, in spite of the contraction brought about by the international financial crisis (2008-09). This growth was primarily driven by favourable international conditions, marked by the rapid growth of world trade and increasing commodity prices, resulting in positive terms of trade impacts for the region.

  • Acknowledgements

    This report was jointly produced by the Economic Commission for Latin America and the Caribbean (ECLAC), CAF, the development bank of Latin America and the Development Centre of the Organisation for Economic Co-operation and Development (OECD).

  • Acronyms and abbreviations
  • Executive summary

    Clouds gather on economic horizon: After a decade of relatively strong growth, Latin America’s economic prospects are becoming more convoluted in response to three main factors: declining trade, moderation of commodity prices and increasing uncertainty surrounding external monetary and financing conditions. This is a consequence of the euro area’s weak performance, the slowdown in China’s economy and uncertainty over U.S. monetary policy. Rising domestic demand could make up for some of the weakening in external demand, but as many Latin American economies are now converging towards their potential GDP from an expansionary period, domestic demand stimulus could increase imbalances. Thus, previous experiences in the region signal the need to carefully monitor the expansion of credit and ensure the sustainability of government spending.

  • General overview

    The external scenario is less favourable for the region due to the downturn in global trade, the moderation in commodity prices and the increased uncertainty surrounding global financing conditions.

  • Macroeconomic outlook

    Latin America is currently experiencing a slowdown in growth due to the downturn in external demand and the structural limitations of its economies. Although the slowdown is only moderate for the moment, there are reasons to believe that it could be persistent if there is no policy action to raise the growth capacity of the region’s economies. Given this scenario, this chapter analyses three important aspects and discusses suitable policies for reducing the associated vulnerabilities. First, it documents the changes in the external context and their consequences for the dynamics of external demand, considering some of the vulnerabilities resulting from the pattern of trade specialisation in the region and the limited ability of domestic demand to sustain growth. It also analyses the potential risks to financial and economic stability in the region’s financial systems amid the high uncertainty regarding the future direction of US monetary policy and liquidity in international capital markets. Finally, the chapter looks at how fiscal policy and the fiscal space are being changed. Institutions and regulations that can facilitate the sustainable creation of fiscal space are particularly important for the Latin American economies. Governments must do more than merely increase their revenue; they must also invest more efficiently and effectively to respond to new needs and demands.

  • Latin America and shifting wealth

    This chapter analyses how economic development in Latin America is being influenced by the contemporary global context, in which global wealth is shifting towards emerging economies. It begins by explaining the main characteristics of this shift, in which China is playing a key role. It then assesses Latin America’s role in the process and some of the consequences that the shift is having on the region’s development model. The new global economic context is shaping an environment that makes it particularly difficult for Latin America to continue its structural transformation, overcome the middle-income trap and make its growth more inclusive. Finally, faced with the prospect that the global scenario will not change much in the near future, the chapter proposes various policy options to enable international integration in a way that fosters the region’s development: creating a more diversified production structure, enlarging the regional market, and capturing value added in the production chain.

  • Productivity, structural change and diversification of production in Latin America

    Development involves economic, social and political changes. Within this process, productivity and change in the production structure are closely related to other areas of the economy and society. For technology and income per capita to converge, countries must move towards more diversified, more complex production structures with more technology and knowledge so they can make progress in improving their productivity and reducing their structural heterogeneity. Endogenous capacity-building and reducing economic and social gaps go hand in hand and require the appropriate public policies. Industrial, technological and capacity-building policies are therefore necessary to achieve these objectives. Consequently in Latin American countries, production diversification policies and industrial and innovation policies should play a central role in the new development strategy. The development agenda must prioritise long-term policies geared towards more knowledge-intensive and innovation-intensive production structures in which social and environmental sustainability are priority objectives.

  • Policies for boosting logistics performance in Latin America

    Logistics, defined as the process required for transporting goods and services from the point of production to the end consumer, is a decisive factor for development and competitiveness. A country improving its score in the Logistics Performance Index by just 1 point has an average labour productivity gain of close to 35%. This is critical for Latin America and the Caribbean, since the region still lags far behind the OECD economies, and the region’s proportion of time-sensitive and logistics-intensive exports is three times more than that of the OECD countries. A range of policies need to be introduced to reduce transport costs, which, relative to tariffs, are much higher than in other regions. Gradually bridging the transport-infrastructure gap is vital for the region. In the short term, however, the region must use "soft" solutions to make the most of current infrastructure and thus improve its logistics performance and competitiveness. These solutions include providing modern storage facilities, streamlining customs and certification procedures and using information and communication technologies for logistics.

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