Latin America and the Caribbean in the World Economy 2014

Regional integration and value chains in a challenging external environment

image of Latin America and the Caribbean in the World Economy 2014
The 2014 edition of this publication reviews the main features of a persistently weak global economy and world trade and then turns to global and regional trade trends and prospects. The publication considers the main changes in the organization of production and global trade associated with international production networks, which are at the heart of current mega-regional negotiations. It looks at how the the region's countries are positioned in international production networks and value chains. It analyzes the main factors underpinning participation in production networks and value chains, as well as the implications they have for integration.

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Participation and upgrading in global value chains

Entering regional and global value chains and upgrading within them, in terms of specialization, market share or value added, can be a powerful mechanism for promoting structural change, reducing structural heterogeneity among companies of different sizes, increasing economic productivity and generating productive employment opportunities. Over time, development policy in many emerging economies has shifted its focus from import substitution and export promotion towards finding a suitable entry point in vertically integrated global production chains or networks and subsequently upgrading within them. A priority for these countries is to attract foreign direct investment (FDI) from multinational corporations and promote the participation of domestic firms in these international production chains.

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