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London, 5 March 2014 Central American Business Council

Logistics and Competitiveness in Central America UK-Central America Business Conference Sebastian Nieto Parra OECD Development Centre. London, 5 March 2014 Central American Business Council. Contents. Perspectivas económicas de América Latina.

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London, 5 March 2014 Central American Business Council

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  1. Logistics and Competitiveness in Central America • UK-Central America Business Conference • Sebastian Nieto Parra • OECD Development Centre London, 5 March 2014 Central American Business Council

  2. Contents Perspectivas económicas de América Latina Competitiveness and Productivity in Central America 1 Policiestoboostlogisticsin Central America 2

  3. La contribución de la región al proceso de reequilibrio de la riqueza es relativamente modesta Theregion’scontributiontoshiftingwealthisrelativelymodest Contribution to global GDP (1990-2011) (in percentages) Source: Authors’ calculations based on data and regional aggregates from IMF (World Economic Outlook).

  4. Una transformación estructural impedida The structure of Central American economies differs in comparison with South American economies: different policies to boost productivity Net barter terms of trade (2000 = 100) • Source: World Bank World Development Indicators

  5. Animpededstructuraltransformation: challengesremainfor Central American countries Una transformación estructural impedida Productive capacities indicator (1990 and 2009) Note: Productive capabilities index. Higher values ​​in the variable let a country produce a more sophisticated range of goods. At any given moment, the capacity variable depends on the level of connectivity of the network of products, which is why it is normalised. Thus a value equal to 0 implies capability levels equal to the worldwide average. A value of 1 (-1) indicates capabilities one standard deviation above (below) that average. Source: Authors’ calculations based on data from COMTRADE and Feenstra, R. C., R. E. Lipsey, H. Deng, A. C. Ma y H. Mo (2005), “World Trade Flows: 1962-2000”, NBER Working Paper Nº 11040.

  6. While in Asia the productivity gap has decreased, it has expanded in most Central American countries • Source: Authors’ calculationsbasedonWorld Bank,“World Development Indicators” and CEPALSTAT data.

  7. Total Factor Productivity: signs of improvementsshould be permanent Source: Calculations based on Penn World Tables

  8. Latin American Economic Outlook 2014 Perspectivas económicas de América Latina Competitiveness and Productivity in Central America 1 Policiestoboostlogistics in LatinAmerica 2

  9. Improved logistics performance could boost labor productivity in Latin America by 35% • Source: Authors’ workbasedonTheConferenceBoard Total EconomyDatabase, World Bank (LPI), Comtrade.

  10. The logistics gap remains high, especially due to the poor performance of transport infrastructure Policy control areas • Source: BasedonWorld Bank data (Logistics Performance Index).

  11. However, thereisvariation in logistics performance withintheregion • Source: BasedonWorld Bank data (Logistics Performance Index).

  12. The Latin American production structure implies that a high proportion of exports are sensitive to logistics • Note: Logistics-intensive sectors include mining, forestry and logging, wood manufacturing, paper publishing and printing. Time-sensitive sectors include agriculture, fisheries, food and drink manufacturing, clothing and horticulture. Latin America and the Caribbean (LAC) consists of 18 countries. • Source: UN COMTRADE.

  13. To boost trade, it is essential to reduce transportation costs • Source: Basedon data fromthe U.S. Census Bureau.

  14. The logistics lag can affect the development of international trade. Example: customs formalities • Note: Data not available for the manufacturing industry in Panama. Latin America and the Caribbean (LAC) consists of 27 countries. • Source: World Bank Enterprise Survey.

  15. The use of ICTs: Contribute to improved logistics performance • Source: World Bank (Logistics Performance Index) and World Economic Forum (Global Competitiveness Index), 2012.

  16. Improvements in infrastructure are essentialforlogisticaldevelopment More and betterinvestment Implementation of appropriateregulations and a betterinstitutionalframeworkfortheplanningphase of thepolicyprocess Expansion of intermodal connectivity and development of transportationmodesotherthanroad Findingappropriatemechanismstomaximizeprivateinvestment in infrastructure

  17. However, reducingtheinfrastructure gap takes time, and in the short term “soft” solutions can be found • Maximizingtheinfrastructure of existingtransport: • Greatercoordinationbetweenagentsinvolved in logistics and a movetoward a comprehensivepolicy. • Simplification of customsprocedures. • Promotion of competition in thetransport sector. • Appropriate use of ICTstosimplifyprocedures and facilitatethe tracking and delivery of goods.

  18. Thankyou!www.oecd.org/dev

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