entral America faces the challenges of consolidating regional integration and trade opening to the world economy and of improving its economic growth performance in order to dramatically reduce poverty and lower vulnerabilities, including those related to greater integration into the world economy. Given the region’s integration into the world economy and the experience gained in multiple trade negotiations, this region needs an “aid for trade” agenda that is not related to the traditional conception that focuses on countries with problems of isolation, little development of the export supply and little exposure to international markets. As a result of the experience gathered thanks to the process of economic integration in the region since the 1960’s, the private sector was prepared to lead Central America’s insertion into the international economy at the right time. Central America’s private sector was ahead of its time. Amidst the worst crisis in its history, it implemented the vision that “what is good for the country is good for the company” and created institutions to promote exports and investment, which, 25 years later, continue to foster development in the region. One of the key factors for the success of exports in Central American is that even during the decade of the worst political and civil conflicts in the region, private sector unions took the lead and did not stop producing public goods such as information, research and promotion for the production of goods and services and the identification of the major obstacles. In view of the role that trade and investment promotion organizations play as the communication channels between the needs of the productive private sector and governmental policies, such organizations have been allies in for the companies in the country that endeavored to produce and export so that they could surmount the major obstacles in the process. Their participation in collecting and spreading information has helped the market to underscore the sectors with real competitive advantages in the country. Central America needs assistance for the diversification of the export supply provided that sustained growth is set to continue. One possibility to achieve that target is by fostering a reduction in the cost of discoveries. This evidence suggests that it is through the discovery/development of export products that an economy may diversify its productive structure, increase its export volume and have a positive impact on economic growth, and this is particularly true in the case of underdeveloped countries. Consequently, the corollary premise is that the capacity to impact on the long term economic growth could be related to the possibility to maintain an adequate discovery rate for as long as possible. One issue that is worth to be taken into consideration in view of its complexity and dynamics is the private sector capacity to invest in the exploration and discovery of new export products and to continue to do so. However, market failures and the low sophistication in the products manufactured and exported by developing countries make them vulnerable to a situation where imitation is faster than in the case of other products, such as the case of products with more
Published on Sep 14, 2007
this report was prepared by the integration and trade sector (int) as a contribution to the regional meeting on mobilizing aid for trade: la...