SELA presented status of integration process in Latin America and Caribbean

November 27, 2015, Caracas.-  The Permanent Secretariat of the Latin American and Caribbean Economic System (SELA) presented on November 26, the study: "Status of the integration process in Latin America and the Caribbean," in the context of the XLI Regular Meeting of the Latin American Council, the highest decision-making body of this intergovernmental organization, based in the Bolivarian Republic of Venezuela.

The presentation of the results contemplated the analysis of the progress of the integration mechanisms in Latin America and the Caribbean, the evolution of trade flows and regional logistics infrastructure; the evolution of FDI flows, and migratory movements of Pacific Alliance (PA), Andean Community of Nations (CAN), Caribbean Community (CARICOM), Southern Common Market (MERCOSUR) and the Central American Integration System (SICA).

According to the study results, the mechanisms of Latin American and Caribbean integration show a mixed picture of evolution, because:

• In the Pacific Alliance, trade among member countries, representing 31% of trade with the region mechanism. This trade consists mainly of manufactured goods with low, medium and high technological sophistication.
• In the case of CAN, tariff barriers have been eliminated to the free trade area established, however, trade between member countries shows low dynamism, emphasizing that in 2014 these exports accounted for 25% of intra-regional trade CAN countries.
• In CARICOM, the mechanism allocates a greater proportion of its total exports to the region, 29% are exports, where the predominant commodity exchanges.
• MERCOSUR maintains a customs union format to implement an external tariff. Thus, in 2014, trade between the member countries of MERCOSUR trade represented 60% of the mechanism with the region.
• SICA is the sub-regional mechanism with greater internal trade, because trade flows represent 76% of the mechanism of intraregional trade.

Since 2010, SELA study notes intraregional efforts made by the regional integration mechanisms, an important dynamic in intra-regional investment flows in a context of lower economic growth in industrialized economies is observed. By 2014, intraregional FDI flows have a share of 37% compared to 3% in 2001 representing.

It is noteworthy that the countries of Latin America and the Caribbean have carried out legal reforms that have improved the business environment in the region, facilitating venture projects between the countries of the region.

In the case of investments among member countries of each mechanism, the Pacific Alliance is one displaying greater dynamism in FDI flows. Investment between the countries of the AP are concentrated in primary activities.

Meanwhile, intraregional investment in the MERCOSUR countries stands at US $ 11,171,000, of which 22.3% is between the same countries of the mechanism. For 2012, the main investors were Brazil and Argentina who spent much of their capital to Uruguay.

The main investors are the CAN countries in North America and Europe; however, investments from Latin America and the Caribbean have significantly offset these investments. Intraregional investments went from representing 15% of total FDI received by the CAN in 2001 to 48% in 2012.

In the SICA, intraregional FDI flows represent 7% of the total FDI received, of this 17% is between the same members of the mechanism. This scenario puts in evidence the relevance for Central investment flows from Europe and North America.

For his part, member countries of CARICOM have been characterized to attract investment flows in services, specifically financial services and tourism.

Moreover, FDI flows have grown at an average annual rate of 46% during the period 2001-2012. The main investor in the countries of the Caribbean Community (CARICOM) is the US. For this intraregional investment, it has a share of 3% for 2012.

Migration of the mechanisms discussed. Achieve the free movement of production factors is central to the consolidation of any integration process. Economic migration, mainly labor reasons, can generate a more efficient allocation of labor and thus increasing productivity.

During the period, 2010-2013, have led to changes in the migration landscape. Economic factors such as the growth of cross-border labor markets, and the liberalization of migration in the context of regional integration agreements, have contributed significantly to the increase of regional migration.

Sub regional integration mechanisms as SICA and CARICOM have the highest rates of migration among member countries of each mechanism are located in 43% and 42% respectively.

In the CAN and MERCOSUR, although there are series of legal instruments that facilitate the mobility of the human factor, migration is still relatively low (25% and 27% respectively) compared to other integration mechanisms.

In the AP, migratory movements are still emerging.

The SELA study analyzes the current state of integration mechanisms in Latin America and the Caribbean, provides relevant conclusions, based on this reality, achieving higher levels of integration will require strengthening coordination, cooperation and coordination processes decision-making, allowing the development of a common agenda that promotes the consolidation of a Latin American and Caribbean economic space.

The SELA study will be subsequently available for consultation through the website www.sela.org