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The Reorganization of Global Value Chains: What’s in it for Latin America and the Caribbean?

Author

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  • Mesquita Moreira, Mauricio
  • Blyde, Juan S.
  • Volpe Martincus, Christian
  • Dolabella, Marcelo
  • Marra de Artiñano, Ignacio

Abstract

As Latin America and the Caribbean bounce back from a sanitary crisis of historic proportions, the search is on for policies that can accelerate recovery while boosting long-term growth. In a scenario of tight fiscal constraints, trade and integration (T&I) policies seem to fit this description. There are particularly high expectations in some policy circles that the benefits of T&I policies will be boosted by an impending reorganization of global value chains. Yet little is known about the relevance, shape, and impacts of this reorganization. Will this lead to reshoring, nearshoring, or some slightly modified version of the status quo? Will this benefit the region? This paper takes a stab at answering these questions. It begins with a critical review of the most frequently cited drivers of the reorganization. This is then followed by an analytical exercise that uses the 20182019 US import tariff hike as a quasi-natural experiment. The results seem more consistent with modest trade and investment gains for the region, associated with incremental rather than major adjustments to global value chains. It concludes by arguing that whatever the future brings, minimizing trade and investment costs is likely to remain the regions dominant strategy.

Suggested Citation

  • Mesquita Moreira, Mauricio & Blyde, Juan S. & Volpe Martincus, Christian & Dolabella, Marcelo & Marra de Artiñano, Ignacio, 2022. "The Reorganization of Global Value Chains: What’s in it for Latin America and the Caribbean?," IDB Publications (Working Papers) 12556, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:12556
    DOI: http://dx.doi.org/10.18235/0004592
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    References listed on IDEAS

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    1. Kristian Behrens & Gregory Corcos & Giordano Mion, 2013. "Trade Crisis? What Trade Crisis?," The Review of Economics and Statistics, MIT Press, vol. 95(2), pages 702-709, May.
    2. Baldwin, Richard, 2012. "Global supply chains: Why they emerged, why they matter, and where they are going," CEPR Discussion Papers 9103, C.E.P.R. Discussion Papers.
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    Keywords

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy

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