Rising Concentration in Asia-Latin American Value Chains

Can Small Firms Turn the Tide?

image of Rising Concentration in Asia-Latin American Value Chains

Dynamic Asia has overtaken the European Union as Latin America and the Caribbean's second largest export market, after the United States. However, the region's exports to Asia remain concentrated in few commodities involved a small number of large firms. This book explores the present and future scope for the participation of small- and medium-sized enterprises (SMEs) in biregional trade and value chains and the measures that can be taken to make those chains more inclusive and sustainable. It encourages governments in Latin America to improve the business environment in order to encourage multinational firms to invest, upgrade and innovate in the region.



Supplier development programmes in Costa Rica and El Salvador

Costa Rica and El Salvador are small open economies in the heart of Central America, which have each adopted different types of export specialization. Costa Rica has transformed its export basket from agricultural products to medium- and high-technology manufactures and services by attracting foreign direct investment (FDI) to these sectors. El Salvador, for its part, has specialized in low- and some medium-technology manufactures and some services. In both countries, large (export) companies have few backward linkages with small and medium-sized enterprises (SMEs). Each country has adopted small supplier development programmes to promote such linkages, albeit with a different focus. Costa Rica promotes backward linkages mainly with foreign companies in the export sector, whereas El Salvador focuses on enhancing the competitiveness of existing business linkages between small and large indigenous firms in its local market. Despite the achievements of each programme in terms of its proven methodological approaches, intellectual capital, know-how and information technology (IT) resources, both face challenges to increase their impact.


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