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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.

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Asian investors and their small and medium-sized suppliers in Chile

In 2013, Chile was the third largest recipient (after Brazil and Mexico) of foreign direct investment (FDI) inflows in Latin America and the Caribbean. From 2001 to 2013, the FDI stock in Chile increased almost fivefold, from US$ 43 billion to US$ 215 billion (ECLAC, 2014). A large share of inward FDI is motivated by Chile’s abundant natural resources, in particular copper, fisheries and forestry. According to ICSG (2014), Chile was the world’s leading copper producer, accounting for almost one third of global production. Forestry is the second-largest source of export earnings, accounting for about 8% of total exports from 2008 to 2013 (Central Bank of Chile, 2014). Other factors that have contributed to Chile’s successful FDI attraction are its macroeconomic stability, investments in infrastructure, trade facilitation and the existence of free trade agreements with more than 30 countries (DIRECON, 2014).

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