Global Value Chains and World Trade
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Global Value Chains and World Trade

Prospects and Challenges for Latin America

The analysis of how Latin American and Caribbean economies participate in different segments of GVCs is at the heart of the current work agenda of the Economic Commission for Latin America and the Caribbean, which focuses on how structural change and productivity gains can promote economic development with equality. This volume builds on the relevant literature and suggests that the movement of firms to higher value added activities in GVCs requires them to step up their innovation efforts and develop new products and processes. Success in improving market shares and value added will depend, however, on which firms innovate most. Hence, innovation is a necessary but insufficient for increasing value added and market shares. Evidence suggests that since the 2008 economic crisis, the participation of Latin America and the Caribbean in global production networks has increased.

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Over the past two decades, the geographical disintegration of production processes has been a salient feature of globalization. The fragmentation of the Fordist vertically integrated mode of production has allowed the global dispersion of value added activities in a value chain or production network. This trend has led to a steep rise in the global trade of intermediate goods and opened up new opportunities for developing countries to participate in these networks.