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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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The contribution of regional integration to production integration

Value chains are rapidly gaining traction worldwide as a means of organizing production. In that context, the governments of Latin America and the Caribbean have identified strengthening production integration as a priority in their development agendas and in their regional integration agreements. Although there is no single definition of regional production integration, it is usually understood as a process by which the production of goods or services is shared between two or more countries in the same geographical area. The aim is to exploit the production complementarities between the countries involved and promote the participation of SMEs and, in general, companies based in relatively less developed countries. Thus, along with the improved efficiency normally associated with value chains, production integration also has broader aims relating to social and territorial development. With the right policies, production and development asymmetries can be reduced between the members of an integration scheme, as well as within countries.

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