Latin America's quest for regional and international integration
CAF, the Development Bank of Latin America, has presented its latest report on the state of the economy and development in Latin America in 2021. The Economic and Development Report 2021 (RED2021) Pathways to integration. Trade facilitation, infrastructure and global value chains was presented by Ernesto Schargrodsky, CAF's Director of Socioeconomic Research, in the Bolivar Room of Casa América.
"Latin America's insertion at the international level is low, as is its insertion at the regional level," Schargrodsky stated. This is the main problem that the report exposes. Despite the fact that Latin American and Caribbean countries have implemented trade opening policies that have significantly reduced tariffs, the results have not been so satisfactory and the region still has a low participation in global trade. In contrast, the weight of Asian economies has increased in this regard.
As Schargrodsky explained, one reason for this stagnation at the global level is the low level of inter-regional trade. However, the main message he wanted to convey in this respect is that RED2021 does not propose a choice between regional or global insertion, but rather that both processes are complementary. "The better interregional insertion will enhance global insertion", he pointed out.
But what can be done to promote regional and global integration? According to Schargrodsky, it is necessary to develop trade-enhancing policies that allow for greater productivity and integration, such as harmonisation, digitisation and standardisation. It is also essential to invest in infrastructure, one of the main ideas of the report.
Before concluding the presentation of the report, Schargrodsky anticipated that RED2023 will focus on energy integration, renewable energy resources and climate change, other major challenges in the region.
Enrique Ojeda, Director General of Casa América; Andrés Allamand, Ibero-American Secretary General (SEGIB); and Adriana Arreaza, Knowledge Manager and Director of Macroeconomic Studies at CAF, highlighted the ideas presented by Schargrodsky during the welcome and opening of the event.
"Regional trade is a platform for advancing internationally," Allamand stressed, who also pointed to protectionism and tariff barriers as the main enemies of integration. "We are in a world of reconfiguration. Latin America has to think about how it wants to participate in this world," he concluded.
Arreaza, for her part, emphasised the need to invest in infrastructure, since it can speed up the commercialisation of products, as well as reduce logistical costs.
After the presentation of the report, Antonia Díaz, professor at the Carlos III University, compared integration in Latin America and Europe. "The experience in other countries allows us to see the process that lies ahead," she said.
This was followed by a round table moderated by Adriana Arreaza. Speakers included José Juan Ruiz, President of the Elcano Royal Institute; Iván Haas, Vice-Minister of Finance of Paraguay; Juan Francisco Martínez García, Director General of Trade Policy, Directorate General for International Trade and Investment; and José Manuel Salazar-Xirinachs, former Minister of Trade of Costa Rica and former Director of the Trade Unit of the Organisation of American States.
Juan Francisco Martínez García referred to the current geopolitical situation arising from the war in Ukraine and the trade war between the United States and China. "The war has generated a change in the frame of reference; politics is now key," Martínez García indicated.
José Juan Ruiz agreed, stressing that "geopolitics has displaced economics". However, the President of the Elcano Royal Institute assured that "the economy is once again the guide for doing business".
The economic and commercial situation in the region also took centre stage. In this sense, the opportunities offered by Latin America and the rapprochement between the Pacific Alliance and MERCOSUR were discussed. As Iván Haas pointed out, during 2018 and 2019, important advances were made that boosted the rapprochement, although with the pandemic this process stalled again. However, interest re-emerged at the end of 2021. Currently, both blocs are undergoing major changes within their administrations, something that, according to Haas, "represents an opportunity".
José Manuel Salazar-Xirinachs, for his part, presented four working approaches to boost the region's regional and international insertion: deepening integration agreements, strengthening foreign investment, developing new policies for productive development, and the integration of regional digital markets.
The closing ceremony was led by María Jimena Durán, Senior Executive of CAF's Management for Europe, Asia and the Middle East (GEAMO), and Andrés Delich, Deputy Secretary General of the Organisation of Ibero-American States for Education, Science and Culture (OEI).
Delich stressed that the integration of Latin America should also involve the education sector, while Durán called for this type of debate, which favours the region's development.
Americas Coordinator: José Antonio Sierra.