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Jorge Máttar Director a. i. ECLAC México

The future of export led growth: is the financial crisis revealing its limits?: Latin America and the Caribbean. Carnegie Endowment for International Peace 29 June 2009. Jorge Máttar Director a. i. ECLAC México. Contents.

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Jorge Máttar Director a. i. ECLAC México

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  1. The future of export led growth: is the financial crisis revealing its limits?:Latin America and the Caribbean Carnegie Endowment for International Peace 29 June 2009 Jorge Máttar Director a. i. ECLAC México

  2. Contents 1. Background: from import substitution to export promotion.2. Trade and output perfomance.3. Impact of the international crisis in LAC.4. Final remarks and perspectives.

  3. LAC exports growth is comparable to SEA.From 1990 X growth in LAC is the fastest Average annual growth rates of exports, 1980-2006 Source: WB

  4. LAC: two-digit growth rates of exports after 1990, but imports are more dynamic Average annual growth rates, 1990-2008

  5. And economic growth has not been as high as it was expected Average annual growth rates of GDP, 1990-2007 Fuente: CEPAL, los datos del PIB están en dólares constantes

  6. Xs are more dynamic than GDP…until mid 2000s: the end of X-led growth? Annual growth rate Note that trends are very influenced by Mexico´s trade performance.

  7. Current situation and perspectives • International crisis already affecting LAC international trade. • Effects depend on macroeconomic strengths (fiscal, monetary, Xrate, foreign debt), trade patterns and modalities of insertion into the world economy: • Trade: goods, services, even labor. • FDI. • Integration; regional cooperation, open regionalism.

  8. The exposure to trade varies in LAC Degree of openness (X/GDP) Source ECLAC. Exports includes only goods.

  9. AMÉRICA LATINA Y EL CARIBE: Canasta de exportaciones de bienes, 2006 (En porcentajes) AMÉRICA LATINA Y EL CARIBE: Distribución geográfica de las exportaciones de manufacturas, 2006 (En porcentajes) World trade will fall in 2009: the effect is not the same in LAC

  10. … the same at the country level… EXPORTACIONES DE BIENES HACIA PAÍSES DESARROLLADOS, 2006 En porcentajes del PIB EXPORTACIONES DE BIENES SEGÚN DESTINO, 2006 En porcentajes del PIB

  11. Terms of trade will be less favourable in South America AMÉRICA LATINA (19): TÉRMINOS DE INTERCAMBIO, 2008-2009 En tasas de variación anual (Estimaciones para 2009)

  12. Effects on exports performance will also depend on the diversification of markets (share of exports)

  13. Intra-regional trade as a means to face fall in global trade? Fuente: CEPAL, sobre la base de cifras oficiales de los países. Los datos del Mercado Común Centroamericano excluyen las exportaciones de Maquila.

  14. Intra-regional trade is more intensive in manufacturing than exports to the rest of the world(Exports structure, 2006) Source: ECLAC.

  15. LAC also exports labor … and remittances are falling

  16. Small economies are the most affected by fall in remittances 24 423 millones AMÉRICA LATINA Y EL CARIBE: TRANSFERENCIAS CORRIENTES (CRÉDITO), 2007 En porcentajes del PIB y millones de dólares

  17. … some countries already show a sharp decline

  18. Fall in tourism will be more severe for small economies in the Caribbean AMÉRICA LATINA Y EL CARIBE: EXPORTACIÓN DE SERVICIOS ASOCIADOS AL TURISMO, 2007 En porcentajes del PIB 40.8%

  19. FDI decline will also be more significant for small economies 24.7% 21.8% AMÉRICA LATINA Y EL CARIBE: INVERSIÓN EXTRANJERA DIRECTA NETA, 2008 En porcentajes del PIB

  20. Final remarks • X-led growth did not produce expected results in terms of GDP growth. • Lack of policies for strengthening linkages between X and domestic production, competitiveness, other productive development polices. • Present slump in world trade is expected to last several years => • LAC can no longer rely on a strategy based on X alone. A more balanced approach is needed…

  21. Final remarks 2 • Diversify markets and product mix. • Intra-regional trade and other integration modalities. • Domestic markets (medium and large economies). • Innovation, competitiveness & productive development policies. • Strengthening linkages between large and SMI.

  22. Thank you jorge.mattar@cepal.org www.cepal.org

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