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Strengthening Value Chains as an Industrial Policy Instrument

Methodology and Experience of ECLAC in Central America

image of Strengthening Value Chains as an Industrial Policy Instrument

In this book the recent experience of ECLAC in the design of industrial policy and technical support to the governments of two Central American countries, El Salvador and Guatemala, is presented. A complete approach was followed to identify in detail, the constraints faced by each link in the value chain. Intervention strategies for strengthening the value chains that showed a participating character (public-private) and drive structural change in the countries of the region through increased productivity and value added, with special emphasis on small producers.

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Introduction

Over the last two decades, Central America radically retargeted its economic growth strategy with a view to boosting export growth, attracting foreign investment and reducing the State’s role in the economy. The model applied helped to reduce inflation, attract investment from multinational enterprises, encourage the expansion of regional conglomerates, diversify the export basket and support a higher level of social spending. Nonetheless, it also led to inadequate and volatile output growth, a low level of domestic investment, widening external deficits and vulnerability to food-price, energy and liquidity shocks. In the social domain, it fuelled an increase in precarious employment, immigration, informality and high and persistent levels of poverty and inequality, with limited capacity to withstand and recover from natural disasters. All of this has served as a drag on the production transformation process in the subregion in these years.

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