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Global Value Chains and World Trade

Prospects and Challenges for Latin America

image of Global Value Chains and World Trade

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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Global value chains in Latin America: A development perspective for upgrading

This chapter presents an overview of the global value chains (GVC) framework, highlighting the benefits of applying this methodology for the future competitiveness and economic development of Latin America and the Caribbean. Examples are presented of the region’s progress to date in using this methodology to engage in a wide variety of global industries. Countries in the region participating in value chains have generally been confined to lower value segments of traditional sectors such as agriculture, manufacturing and extractive industries. As firms continue to globalize their production networks, Latin America is well positioned to leverage its experience in these sectors to move beyond basic production activities and add greater value in its export sectors. Upgrading into higher value segments in these global chains depends to a large extent on the quality and availability of human capital. The final section gives examples of workforce development strategies and innovation systems across the region that can drive this upgrading.

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