Machinery production networks in Latin America: a quantity and quality analysis

This paper investigates the effects that the increase in import of machinery parts and components and changes in the suppliers' composition had in the trade of final products and parts and components inside Latin America. In our analysis we consider these effects according to two dimensions: a quantity one that captures if there was an intensification of trade, and a quality one that captures changes in the sophistication of the traded goods. The research employs disaggregated trade data obtained from the UN Comtrade for 17 Latin American countries between 1996 and 2011. We find evidences that an increase in import of parts and components from Latin America had positive impacts on the quantity dimension, while increases in imports from the East Asian region, in special China and Hong Kong, had positive effects on the quantity dimension, nurturing the expansion of machinery production networks inside Latin America, and positive effects on the quality dimension, increasing the sophistication of the products traded inside Latin America. On the opposite side, imports from United States and Canada had negative quantity effects.