IDB urges Caribbean, Latina America to take advantage of US$78 billion nearshore markets

Jun 20, 2022 News

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– Guyana could make as much as US$400m in medium term

Kaieteur News – Guyana can earn as much as US$400million, the highest medium- term sum among Caribbean nations, if it activates nearshoring opportunities; for increased exports in goods, a report from the Inter -American Development Bank (IDB) has stated.
The IDB has urged the Caribbean and Latin America to take full advantage of a possible $78 billion trade market that can greatly improve their response to ongoing global constraints as well as increasing their contributions to the affected global supply chains.
In a meeting dealing with commerce and trade opportunities in the Americans earlier this month, the IDB said it provided estimates to relevant stakeholders highlighting nearshoring opportunities where countries can benefit from billions of dollars in trade areas.
The bank said that nearshoring could add an annual $78 billion in additional exports of goods and services in Latin America and the Caribbean in the near and medium term, with opportunities for quick wins in industries such as textiles, pharmaceuticals, and renewable energy, among others.
This information was provided to senior government officials from Latin America and the Caribbean, including ministers of trade and foreign affairs, and senior executives from companies of the Western Hemisphere, when they gathered to analyze options for taking advantage of the opportunities provided by the reconfiguration of global supply chains, trends in trade sustainability and climate change, and the increasing digitalization of economies.
IDB president Mauricio Claver-Carone said that “Increased environmental concerns, along with the health crisis and the recent invasion of Ukraine by Russia, has presented an opportunity in which the region can contribute to the global economy and the fight against inflation by taking a more active role in global supply chains in a way that is sustainable and equitable.”
Supporting the reconfiguration of global value chains is a priority of the IDB’s Vision 2025 plan to accelerate the economic recovery and growth of Latin America and the Caribbean. As such, the meeting of ministers and CEOs, which came ahead of the recently concluded Ninth Summit of the Americas, “represented an important effort by the IDB to promote economic recovery through the collective action of countries, in close cooperation with the private sector.”
The meeting, therefore, sought a deepened understanding on key trade issues where more than 100 companies such as Microsoft, Citibank, and Amazon among others, took part, with panel intervention. The Bank pointed out that recent studies have shown that participation of firms in global value chains (GVC) brings multiple benefits, in addition to traditional gains from additional trade and investment. “Participation in GVC increases productivity through transfers of technology and knowledge and creates jobs and more opportunities for women. An increase of 10 percent of a country´s participation in GVC increases its per capita GDP by 11-14 percent.”
For the region to take advantage of opportunities that come with increased participation in GVC, the IDB recommended countries focus on a “”3i” strategy: investment, infrastructure and integration.” The Financial institute noted that when it comes to investment countries should increase efforts to attract same, including by making improvements in the business climate and in the capacity of investment- and export-promotion agencies. The IDB estimates that each dollar invested in investment promotion produces almost $42 in direct foreign investment.
Improving infrastructure in trade, connectivity, transportation and logistics in the region is key to ensuring firms are cost competitive. “A 10 percent reduction in international shipping costs increases the value of exports by at least 30 percent,” the IDB estimates concluded. Where integration is concerned, the region must deepen and modernize its regional integration to lower trade friction and boost competitiveness.
This includes redoubling efforts to converge and harmonize more than 33 preferential trade agreements in the Americas. This harmonization would result in an increase in intraregional trade of nearly 12 percent. In addition, the IDB said the region must increase the availability of financing for companies, particularly to enable small and medium-sized firms to connect with international markets.
The IDB president said that participation in the trade opportunity meeting is a demonstration of leaders, from the public and private sectors putting their differences aside, “… to find ways to create jobs and improve the wellbeing of our citizens – and trade is one of the main avenues to accelerate our prosperity.”

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