Barranquilla, Colombia, Mar 19 (efe-epa).- Latin America should respond to the Covid-19 pandemic’s disruption of global supply chains by bolstering local production and renewing efforts toward regional integration was the message during Friday’s session of the annual meeting of the Inter-American Development Bank (IDB).
At present, the region’s involvement in the world economy is mainly as a provider of commodities.
“Latin America and the Caribbean must make an effort to achieve greater regional integration that, in its turn, allows it to insert itself more efficiently in the world,” IDB head Mauricio Claver-Carone said Friday from Barranquilla, the host city of this year’s virtual conference of the institution’s Board of Governors.
Over the last 30 years, the value-added component of Latin American exports has oscillated in the range of 18 percent to 19 percent.
The comparable figure for Asia is 33 percent, while the level of value-added in exports from European Union member-states is 43 percent, according to IDB data.
IDB economists estimates that with a successful program to strengthen the regional value chain, Latin America and the Caribbean could increase exports to the United States by $70 billion, mainly in sectors such as textiles, vehicles and medical products.
To make that a reality, the IDB says, governments need to “improve the physical and digital infrastructure of trade, and move forward on the pending agenda of modernization and harmonization of trade accords and of regulatory frameworks.”
Claver-Carone pointed to Colombia as an example of a country that has begun to implement some of the IDB recommendations.
Colombia has already made progress in “relocalization of activities of technological services, food and beverages, plastics and resins,” he said, with further scope for expansion in sectors including pharmaceuticals and vehicles.
Joining Claver-Carone for the discussion were Colombian President Ivan Duque, Organization for Economic Cooperation and Development Secretary General Angel Gurria and several executives from the private sector.
Duque stressed the region’s potential.
“If we compete on quality and price, and moreover we are near the market, the opportunity is there to be exploited,” he said. “The reality the pandemic leaves is that it has alerted us to the fragilities of the global economy and also the risks of the US economy when it has a great part of its industrial supply chain in places at great distances.”
Economic activity in Latin America fell by 7.4 percent in 2020, the biggest slump in decades, and though a rebound of 4.1 percent is forecast for this year, a return to pre-pandemic levels is not expected until 2023, mainly due to the impact the health crisis has had on employment, according to the International Monetary Fund.
On Saturday, the heads of delegation of the IDB’s 48 member-nations will convene to review the economic forecast for the region in 2021 and begin the conversation about what would be the institution’s capital expansion since 2008.
Claver-Carone, the first US head of the IDB, has set a goal of expanding the institution’s annual lending capacity from $12 billion to $20 billion. EFE afs/dr