Competitiveness in the Latin American manufacturing sector: trends and determinants
After analysing the evolution of exports from the large Latin American countries over the last decade, and examining on a case by case basis the determinants for each countryÃ¢â‚¬â„¢s performance, this study concludes that competitiveness in the manufacturing sectors of most countries in the region went down from 2007 to 2012, after relatively favourable progress in the previous five-year period between 2002 and 2007. This recent deterioration, which has been more noticeable in countries such as Brazil and Colombia, is related to the real exchange rate appreciation, high labour costs and insufficient progress in labour productivity. The main exception to these regional trends is Mexico, where gains in the manufacturing sectorÃ¢â‚¬â„¢s competitiveness continued beyond 2007, partly because the exchange rate stayed relatively depreciated and labour costs, as well as work productivity, performed better than in the South American countries. However, from 2011 onwards, the reversal of these trends has been making it difficult for the Mexican manufacturing sector to gain competitiveness. Case studies of each of the regionÃ¢â‚¬â„¢s main countries show that in general the exchange rate, labour costs and work productivity were the main determinants in the evolution of manufacturing competitiveness in the last decade. In fact, the countries and periods where these variables performed poorly coincide with losses of market share in international trade and deteriorating competitiveness. Nevertheless, the impact of the remaining variables affecting the manufacturing sectorÃ¢â‚¬â„¢s competitiveness is not insignificant either. In fact, gains in competitiveness have been greater (and losses in competitiveness smaller) in Chile and Peru, where the institutional framework has improved and logistics and energy costs reduced or kept under control.
References listed on IDEAS
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- Canuto, Otaviano & Cavallari, Matheus & Reis, José Guilherme, 2013.
"The Brazilian Competitiveness Cliff,"
World Bank - Economic Premise,
The World Bank, issue 105, pages 1-8, February.
- Otaviano Canuto & Jose Guilherme Reis & Matheus Cavallari, 2013. "The Brazilian Competitiveness Cliff," World Bank Other Operational Studies 17038, The World Bank.
- Frederick van der Ploeg, 2011. "Natural Resources: Curse or Blessing?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 366-420, June.
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- Dos Santos, Enestor & Zignago, Soledad, 2012. "The Emergence of China and the Evolution of International Trade in Brazil," Revista IntegraciÃ³n y Comercio (Integration and Trade Journal), Inter-American Development Bank, INTAL, vol. 35(16), pages 83-102.
- Lall, Sanjaya, 2001. "Competitiveness Indices and Developing Countries: An Economic Evaluation of the Global Competitiveness Report," World Development, Elsevier, vol. 29(9), pages 1501-1525, September.
- Canuto, Otaviano & Cavallari, Matheus & Reis, Jose Guilherme, 2013. "Brazilian exports : climbing down a competitiveness cliff," Policy Research Working Paper Series 6302, The World Bank.
- Eckhard Siggel, 2006. "International Competitiveness and Comparative Advantage: A Survey and a Proposal for Measurement," Journal of Industry, Competition and Trade, Springer, vol. 6(2), pages 137-159, June. Full references (including those not matched with items on IDEAS)
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