IDB Blames Lack of Competitiveness For the Decline in LatAm Export Volume

The recent growth in exports, according to the IDB, was driven largely by the increases in the prices of commodities such as oil and copper.

export volume

The Inter-American Development Bank (IDB) has expressed deep concern over Latin America’s shrinking export volume, blaming the decline on decreasing competitiveness.

The value of goods export from Latin America grew 9.7 % in the first quarter of 2018 compared to the same quarter in the previous year, but the volume of exports was found declining by 3%.  Moreover, the recent growth in exports was driven largely by the increases in the prices of commodities such as oil and copper.

This ‘speaks to the region’s loss of market share due to declining competitiveness’, the bank has stated.  According to the report, low productivity and high trade costs are affecting the export performance of the region.

It is estimated that the region’s competitiveness dropped by 7.4 percentage points between 2011 and 2016, while exports decreased by a stunning 22%.

“In a global context of growing uncertainty and low regional competitiveness, Latin America and the Caribbean urgently need to prioritize a policy agenda that will enable a leap in the quality of their exports,” said Paolo Giordano, principal economist at the IDB’s Integration and Trade Sector, who coordinated the report. “More sophisticated exports will help support the current trade recovery and lay the foundations for greater growth in the future.”

The IDB has urged countries in the region to leverage the potential for regional integration and develop what it calls ‘complex value chains’ to boost export.

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“Strengthening higher-quality trade flows and regional value chains would not only benefit the export diversification and sophistication of exports, it would also help improve the competitiveness of the region’s economies in the global market,” the bank added.

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