Over the past ten years, IT-enabled services in Latin America and the Caribbean have grown by an average of 25% annually, but the region must overcome several hurdles to see further growth in the services sector, says the United Nation’s intergovernmental agency UNCTAD.
This data was released at the Chilean capital of Santiago where the UN agency held a two-day meeting with regional government officials and representatives from the private sector to discuss ways to boost the services industry in Latin America.
The sector is growing at a commendable speed, yet services imports exceed exports in several countries, except from the Caribbean.
Services on average accounted for 74% of gross domestic product (GDP), and almost 80% of employment in urban areas, noted UNCTAD Secretary-General Mukhisa Kituyi in a video message. In the Caribbean sub-region, he said, services contributed to more than 90% of GDP.
Total services exports from Latin America and the Caribbean exceeded $160 billion in 2012. Nevertheless, the agency says, the balance of services trade in the region is becoming increasingly negative.
LAC countries, according to the UNCTAD, have taken different policy approaches to developing and promoting their services sectors. A deeper analysis of data shows that most growth has taken place in lower-productivity services.
Given its statement, there are several challenges the region is confronting on its way to upgrading value chains in the services sector. The most important among them are: access to finance, tax regulation and investment incentives; competition and consumer protection regimes; development of human capital; the promotion of SMEs and innovation and technological upgrading.
At the meeting, Antonio Prado, Deputy Executive Secretary of ECLAC, asked the countries to redesign their policy approaches and move toward more integrated services markets.