ECLAC Proposes Greater Productive Coordination to Move Toward Regional Integration

Lima, May 8.- The Economic Commission for Latin America and the Caribbean (ECLAC) presented a proposal to move toward regional integration through more coordinated production between countries. Such integration should enable them to respond to the accelerated technological innovation that characterizes this moment in history, the changing positions of different actors in the global economy and the formation of broader regional markets.

In its document Regional Integration: Towards an Inclusive Value Chain Strategy, ECLAC stresses the validity of the integration concept in the current international context as a basic component of productive transformation and strategies for growth with equality.

Specifically, the organization proposes policies for creating regional and sub-regional value chains which could boost manufacturing exchange, intra-industrial trade and the internationalization of small and medium size entreprises (SME) and increase the number of exporting companies and exported goods.

The proposal was presented during the seminar Challenges to Regional Integration, in the framework of the Thirty-fifth session currently being held by the institution through Friday, May 9, in Lima.

In this report, ECLAC calls on countries to carry out joint actions in matters of financial, infrastructure, digital, social and environmental integration to foster broader regional productive integration.

It also promotes collective action in matters of innovation and science and technology in order to boost the presence of companies and technological centers of the region in global knowledge networks.

These actions aim to build advantages to allow the region to position itself in a restructuring global context, where emerging and developing economies gain ground in the international scenario and where South-South relations, particularly between the region and Asia-Pacific will critically determine development options.

Over the last decade, Latin America and Caribbean regional integration dynamics have experienced important transformations, according to the report.

For example, some countries have criticized the emphasis placed on the trade dimension that characterized some of the main integration initiatives in the nineties. These nations have sought to focus efforts on broadening the integration agenda to other areas, highlighting political and social aspects.

Another factor that has influenced these transformations is the global financial crisis that began in September 2008, whose impacts are still being felt particularly in industrialized economies.

The scale of the crisis cast doubt on some conceptions regarding the globalization process and gave validity to more heterodox viewpoints that assign a greater role to the State, not only as a regulator but also as a facilitator of active industrial policies.

In its report, ECLAC says the economy of Latin America and the Caribbean continues to be highly dependent on external cycles. Considering that the global economic context looks less favorable to the region than during the period 2003-2013, it is imperative to think about the key role that regional integration can play in improving the region's inclusion internationally.

The document underlines that in order for the region to achieve sustainable growth, reduce poverty and inequality and progress in matters of innovation, it must diversify its production and export structure. It thus outlines the need to advance towards common regulatory frameworks, which stimulate each country's businesses to coordinate their operations with others beyond their borders.

The emergence of value chains in the global economy has turned attention towards the importance of regional space as a pillar of the principal production networks, characterized by complex goods, services, information and people flows, says the publication.

The challenge for the countries of the region lies not only in being part of value chains but also in building distinguishing elements that enable them to ascend in the value-chain hierarchy, beyond the provision of natural resources or low labor costs.

For this purpose, ECLAC proposes the gradual creation of shared industrial-policy spaces in productive sectors with potential to produce competitive value chains. The advances the region has experienced in different areas work in favor of this argument, says the organization.

Latin America and the Caribbean currently have better macrOECOnomic management, have developed technological capacities in several activities and sectors, and some of the region's countries have taken meaningful steps in natural resources governance. In addition, its economies are more open in general and many of them are interconnected by trade agreements.

In the last decade, the region has developed a rich and complex integration architecture, with the creation of the Community of Latin American and Caribbean States (CELAC), the Union of South American Nations (UNASUR), the Bolivarian Alliance for the Peoples of Our America-Peoples' Trade Treaty (ALBA-TCP) and The Pacific Alliance.

These initiatives add to existing sub-regional integration mechanisms, highlighting the importance and challenges faced by convergence between different integration processes and initiatives. ECLAC's report argues that this convergence will necessarily be a gradual, non-linear process.

Finally, the institution calls for considering integration a State policy - one that seeks convergence and, rather than eliminate differences, aims to make them manageable. In a diverse region like Latin America and the Caribbean, this is the main challenge for achieving integration to boost the structural change it requires.