Policies to Promote the Advancement of Productive Internationalization in Latin America

How to Support Productive Internationalization in Latin America?

By Juan Carlos Hallak - Andrés López

Latin American countries are known to experience difficulties in integrating into the international economy.  Numerous studies bear witness to this while recommending various policies to promote the advancement of productive internationalization in the region.  Despite their potential benefits, the recommended policies can only be implemented in the presence of certain state capacities, which differ depending on the type of instrument.  Managing a temporary import admission regime requires different capacities than implementing a single window for trade, promoting exports, or attracting investment.  Policies also differ in terms of their associated costs and risks (e.g., corruption, state capture).  However, countries often implement new policies without evaluating the available capacities or analyzing the related costs and risks, leading to a failure in achieving the expected benefits or resulting in truncated or failed experiences2).  However, countries often implement new policies without evaluating what capabilities are available or analyzing the costs and risks associated with them.  As a result, they may fail to reap the benefits they are hoping for.

Although the tools and categories available for assessing the capacities and risks entailed in different types of policies have been limited so far, significant efforts have been made to overcome this challenge.  A new publication released by the Integration and Trade Sector (INT) at the Inter-American Development Bank (IDB) is a significant step in this direction.  “Supporting the Internationalization of Production in Latin America: Policy Analysis, State Capacity Requirements, and Risks” (available in Spanish only) aims to build and apply analytical instruments as part of a wider evaluation of productive internationalization policies in Latin America.  The next two sections of this blog post examine these instruments in greater detail.

State capacities: a black box

We start by dividing policies into four categories:

1. Tax and financial incentive regimes, aimed at promoting exports and investments;  

2. Productive internationalization support programs, generally run by agencies specialized in promoting exports, investments, and financial support institutions;  

3. Legal, operational, and physical infrastructure, which reduces costs and times for commercial transactions (physical and telecommunications infrastructure, trade facilitation, international agreements, etc.); and 

4. Coordination of policies supporting internationalization, such as export plans, councils, roundtables, and other internationalization strategy coordination mechanisms the required capacities vary depending on the different “phases” of the policy lifecycle:  

• Adoption: This is the decision-making stage for implementation, designing, and launching a policy. 
• Operation: This is where the administration of the benefits and/or services that the policy provides takes place. 
• Evaluation: This phase involves continuous monitoring and impact evaluations, which may lead to decisions to redesign or terminate the policy.

The associated risks also differ in these three phases.

We found that the four types of policies particularly differ during the operation phase, and that the capacities required by coordination programs and policies at that stage are the most complex and hardest to build.  In contrast, regimes have lower capacity demands during this phase.  As a consequence, they tend to last longer and predominate in many countries, even in the absence of the capacities needed to adequately develop the remaining two phases.

The situation in Latin America

Latin American countries have implemented a wide variety of policies to support internationalization, but they have not always been successful in generating the expected impacts.  Often, the costs of these interventions seem to have been excessive in relation to the benefits obtained.  In other cases, the downsides were not taken into account sufficiently.  Likewise, on several occasions, policies that have not been rigorously evaluated and whose cost-benefit balance is dubious have been maintained over time, while others have been discontinued based on political rather than technical criteria.

Similarly, the region has disproportionately prioritized regimes over programs and coordination initiatives and has not always succeeded in providing the type of infrastructure needed to facilitate exports and attract investments.  The fiscal cost of regimes can be twice as high as that of programs, if not more so, and is also far higher than that of coordination policies.  At the same time, there are often shortfalls in the provision of some relatively low-cost public goods (e.g., trade facilitation).  This imbalance is puzzling, especially considering that the evidence on the impact of regimes is mixed at best.  Regimes also allow more room for state capture and corruption practices - and dismantling them is often complex even when they do not deliver the expected results due to the economic-political interests that emerge around keeping them in place.

Several factors explain countries’ preference for regimes: i) the capacity requirement is lower, primarily in the operational phase; ii) adopting a single regime is relatively easy, for example, by  replicating the characteristics of existing programs in other countries,; iii) the fiscal cost generally consists of tax waivers that do not involve direct expenditure; iv) the visibility and political impact of regimes is usually higher, since it is easy to attribute the direct creation of a certain number of jobs to their implementation.

In contrast, programs require more complex capacities, along with flexibility and appropriate incentive schemes.  At the same time, they have fewer political pay-off, are harder to communicate, and imply direct expenditures that, although small, tend to be prioritized for other more urgent uses.  Under these conditions, there may be limited political conviction to adopt programs, resulting in insufficient or volatile funding.  Thus, “vicious circles” can emerge: if a program’s resources are limited or unstable, it may not be effectively implemented, which then limits its impact and may favor its dismantling.

Recommendations

In conclusion, Latin America has implemented a variety of policies to support internationalization, but these have often failed to generate the expected impacts due to a series of factors.  These include an overemphasis on regimes, a lack of adequate infrastructure, and shortfalls in the capacities needed to implement and evaluate policies.  With these points in mind, we recommend the following courses of action:

First, before deciding to adopt an intervention, countries need to have the capacity to implement it appropriately throughout its life cycle, and to identify and properly assess the potential risks it entails.  This is particularly important for policies with high sunk costs, and which would be politically costly to reverse.

At the same time, the optimal policy portfolio should not take these capacities as given and immutable, but rather “invest” in building them pari passu as the development process moves forward.  The results obtained can help to legitimize the agencies that implement them and contribute to their gaining stability and accumulating the individual and organizational capacities that will enable them to handle more complex interventions with broader and more substantive impacts.  This is essential for Latin American countries to significantly improve their integration into the global economy.

Source 

Caricom has Failed in having the Cuban Embargo Lifted

The ultimate goal of the embargo against Cuba was to cripple the Cuban economy and force President Fidel Castro’s hand in changing his style of governing, all efforts have failed in this respect

"THE CUBAN EMBARGO SHOULD BE STOPPED!"

By: Dr. Kevin Turnquest-Alcena

After 50 years as an organization, the Caricom has been ineffective at having the Cuban embargo lifted. It’s a travesty that America is still trying to weaponize Cuba in this modern day and time.

To my inquiring readers, what is an embargo one may ask? Well, according to Wikipedia it is, “the partial or complete prohibition of commerce and trade with a particular country or state or group of countries.”

Four countries the Bureau of Industry and Security (BIS) have implemented U.S. sanctions against are: Cuba, Iran, North Korea, and Syria. The continuous and age old assault on Cuba is tantamount to immoral conduct.

They are willing to work with countries such as: Vietnam, whom they were at war with and China because of some benefit to them, then why not Cuba? We have to collectively find a way for America to understand that Cuba needs to be a part of and coexist with the global community. It is time America realizes Cuba’s political system, as well as the structure of how Cuba achieves its revolution is not going to disappear.

Robert Zubrin stated that, “The U.S. trade embargo on Cuba is almost completely ineffective, as many other countries, including the European Union, do not honor it.” The Biden Administration must consider the realities of the Cuban people. Yes, the there are some deep geo-politics in regards to individuals who do not like what is going on in Cuba, but it does not negate the fact that this issue needs to be readdressed.

Former President Barak Obama understood the need for open dialogue about the embargo as was stated in his address to the Cuban people during his visit to Havana. He said that, “...on December 17th 2014, President Castro and I announced that the United States and Cuba would begin a process to normalize relations between our countries. Since then, we have established diplomatic relations and opened embassies. We've begun initiatives to cooperate on health and agriculture, education and law enforcement. We've reached agreements to restore direct flights and mail service. We've expanded commercial ties, and increased the capacity of Americans to travel and do business in Cuba.”

In February 1962, President John F. Kennedy proclaimed an embargo on trade between the United States and Cuba, in response to certain actions taken by the Cuban Government, and directed the Departments of Commerce and the Treasury to implement the embargo. The Cuban embargo solely exists because they stand in solidarity, choosing to operate their political system the way they want.

This continued condemnation by America is unjust and inhumane, especially for a country that promotes freedom of speech. This embargo has majorly impacted the Cuban economy and has resulted in a $144 billion loss in the trading economy. While the ultimate goal of the embargo was to cripple the economy and force President Fidel Castro’s hand in changing his style of governing, all efforts have failed in this respect.

The embargo limits the people of Cuba from accessing the internet to support their small businesses, take online U.S. courses, and use financial services like PayPal, yet Cuba has continued to exist and survive without the support of the American government.

America claims that the embargo is for the betterment of the Cuban people, yet it does more harm to the people than good. Its licensing requirements prevent food, medicine, medical equipment and humanitarian aid assistance from reaching Cubans.

Nonetheless, these restrictions have only encouraged the Cuban people to be innovative in their approach to taking care of the citizens of their country. Cuba managed to develop its own COVID-19 vaccine. Their development included the research, production, and rollout of the vaccine, which resulted in a 90% vaccination rate.

Cuba has educated Africa and The Caribbean in medicine and engineering, just to name a few. They now have over 2,000 institutes as result of the 1959 revolution. Cuba has developed one of the best healthcare systems in the world. This was achieved by instituting 23 medical schools and educating those students for free. This has resulted in one of the highest doctor to patient ratios in the world, 8 for every 1,000 citizen. Gender equality is also held in high regard with women having just has much opportunities for education as men.

Cuba ranks second in the world in terms of most female representation in the country’s main governing body with a Congress that is 53 percent female. Education is the under lying cause of such achievements with Cuba having a 96% literacy rate.

So, the real question is, has the embargo really attained its goal of suppressing the Cuban country? Has it really achieved its aim of stopping trade with other countries? The resounding answer is No!

Daniel 2:21 says, “And he changeth the times and the seasons: he removeth kings, and setteth up kings: he giveth wisdom unto the wise, and knowledge to them that know understanding:” Hence, this then begs the question as to what is America’s present goal for reinforcing the embargo.

What purpose does it really serve for continuing their separation from Cuba? Would it not be more beneficial and useful if they worked with Cuba, rather than against them?

The reality is after 64 years of oppressing Cuba through the embargo, it has still not altered their political systems and way of life. As Allison Pujol writer for The Michigan Daily said, “Cuba’s heads of states recognized fairly quickly that the United States was not essential to the island’s economic future.

And thus, like the embargo, Cuba’s one-party system has remained intact with little to no visible change.” I end with the words of the man at the center of it all: “Capitalism has no moral and ethical values: everything is for sale... it is impossible to educate people in such an environment: people become selfish, and sometimes turn into bandits” (Fidel Castro).

Source 

The Crux of The Bahamas National Trade Policy

The Bahamas Ministry of Economic Affairs Launches First-Ever National Trade Policy

The New Bahamas Trade Policy is intended to lower trade deficit and empower local Bahamian businesses

After years of stakeholder consultation and collaboration with local and international experts, the Government of The Bahamas has launched the National Trade Policy, an initiative that has been spearheaded by the Ministry of Economic Affairs.

The National Trade Policy was formally unveiled at a press conference hosted by the Ministry of Economic Affairs on Thursday, 25th of May, 2023.  At this press conference, members of the media were afforded the opportunity to hear from the Minister of Economic Affairs, Senator, the Hon. Michael Halkitis, Bahamas Trade Commission Chairman, Philip Galanis, and other technical experts who highlighted the work that went into crafting the policy, as well as the impact it is projected to have.

Minister Halkitis stated that the primary objective of the national trade policy is to tap into the unexplored areas for the international trade of goods and services where there is vast potential for Bahamian businesses to benefit.

He noted that this policy will supplement the economic development and diversification initiatives that the Davis administration has taken on since taking office.

“The National Trade Policy is a key component of a wider developmental strategy to diversify the economy, empower Bahamian businesses domestically and internationally, and lower the trade deficit.  Key areas that are being targeted by the government, such as niche agricultural and fisheries products, uniquely Bahamian crafts, food, and goods, and green, blue, and orange economy products and services will all benefit from this policy.”

Acknowledging the calls by local businesses for greater ease in conducting international business and exporting goods and services abroad, Minister Halkitis said that the National Trade Policy will help to facilitate the import and export of in-demand goods and services, ushering in a new era for trade in The Bahamas.

“We know that many businesses have called for the government to reform existing processes to make exporting their products more seamless.  Through this policy, we believe that we have put the right mechanisms in place.  We will expand awareness through stakeholder education to arm local businesses with everything they need to expand their customer base beyond the borders of The Bahamas.”

As the policy moves from the development phase to the implementation phase, Minister Halkitis noted that the government will continue to keep its ears open to local businesses and its eyes open for international opportunities.

“The policy we have before us today is the product of continuous stakeholder engagement.  We have incorporated much of that engagement to ensure that the policy before us today is as strong and comprehensive as possible.  As we implement the policy, the key is to remain agile and open to ways we can continue to strengthen the policy in response to local needs.”

Minister Halkitis encouraged all local businesses and aspiring entrepreneurs who are interested in engaging in international trade to stay tuned as the government continues to engage with the local business community to empower businesses of all sizes to take advantage of the new national trade policy framework.

“Ultimately, the true measure of the effectiveness of this policy lies in its ability to empower Bahamian businesses, lower the trade deficit, and contribute to the creation of a more resilient and diverse economy. We encourage all businesses to get informed and get involved.”

Any business owners who wish to learn more about the National Trade Policy can download a full copy of the policy document at https://moea.gov.bs/the-bahamas-national-trade-policy.

Source 

The Caribbean Community Heads of Government commended Canadian Prime Minister, the Rt. Hon. Justin Trudeau for continuing the legacy of strong relations between CARICOM and Canada

CARICOM, Canada Strengthen Relations

Diplomatic relations between the Caribbean Community (CARICOM) and Canada were strengthened on Thursday 16 February with an engagement between the Conference of Heads of Government and Canada’s Prime Minister, Rt. Hon. Justin Trudeau, in The Bahamas.

The two parties discussed the situation in Haiti, climate change and climate financing, trade, increased people to people contact, regional security, among other issues.  

In his address to CARICOM Heads, the Canadian Prime Minister announced a new funding initiative totaling $44.8 million to tackle the climate crisis in the Caribbean.

He said the fund will support projects within regional organisations like the Caribbean Community Climate Change Centre (5Cs), and the Caribbean Biodiversity Fund to improve marine and coastal ecosystem management, increase water security and to help governments respond to the impacts of climate change.

Acknowledging the challenges CARICOM countries face with accessing concessional development financing, he applauded the Bridgetown Initiative led by Prime Minister Mia Mottley of Barbados.  The Initiative has “re-energised the conversation on International Financial Institutions’ reform to the overlapping health, climate, debt, and liquidity crisis affecting many CARICOM countries,” the Canadian Prime Minister stated.

On the trade side, he said Canada is seeking a renewal of a waiver from the World Trade Organisation for goods from the Region to enter Canada duty-free beyond 2023, through the CARIBAN programme.

CARIBAN was announced in Nassau during a CARICOM Heads of Government Conference in 1985 and Prime Minister Trudeau said it is “only fitting” that CARICOM-Canada Heads of Government renew their commitment to the trading agreement during their meeting Thursday.

CARICOM-Canada reciprocal trade reached $1.9 billion in 2021, while bilateral trade in services reached $3.9 billion, Prime Minister Trudeau told CARICOM heads as he highlighted the strong trade ties between the two parties.

Heads of Government commended Prime Minister Trudeau for continuing the legacy of strong relations between CARICOM and Canada.  They advocated for his country’s support on concessional funding for climate change related loss and damage, recovering from disasters, and development financing.  Heads also emphasised the need for increased people-to-people contact between CARICOM and Canada through the restoration of visa-free travel.  In response to the latter, Prime Minister Trudeau said that Canada will in the coming days, announce new measures to simplify access to “trusted travelers” from CARICOM and other countries in the Region.

Source

The Bahamas’ numbers on foreign trade are dismal

Annual Report Reveals Dip In Trade Numbers

Jones Bahamas:

The Department of Statistics has released the 2013 Annual Foreign Trade Statistics report and according to the numbers released, the country’s numbers on foreign trade are dismal.

The report that presents data on the volume and nature of trade between The Bahamas and its trading partners estimated that during the year 2013 the value of commodities imported into The Bahamas totaled nearly $3.4 billion resulting in an eight percent decrease below the 2012 total of $3.6 billion.

“The largest contributor to imports which totaled some $726 million was mineral fuels accounting for 21.6 per cent of the imports,” the report noted.

“This category was followed closely by machinery and transport equipment which accounted for nearly 20 per cent or $657 million. Other categories that contributed significantly to total imports were manufactured goods that included wood, metal, steel or other construction materials, textiles and articles of clothing. This category accounted for 13.7 per cent or $460 million.”

In terms of exports the largest contributor to this sector consisted mainly of chemicals that include polystyrene and other plastic materials which accounted for 67.3 per cent of total domestic exports.

This category was closely followed by food and live animals which accounted for 25.2 per cent and included in this category are crawfish, rum and salt.

“More significantly though, of these two categories, three commodities combined, expansible polystyrene valued at $174.7 million, other compounds containing a quinoline or isoquinolinering’ at $61.6 million and spiny lobster tail frozen at $84.4 million accounted for some 88 per cent of total domestic exports,” it added. “Other exports included, mineral fuels at $237.8 million and machinery and transport equipment $95.9 million.”

Countries that The Bahamas trades with virtually remained the same with The United States maintaining its position as The Bahamas’ number one partner.

Even though The Bahamas did a significant amount of trade with Puerto Rico, Trinidad and Tobago, Japan and Canada, the US still represented 81.8 per cent of total imports and about 83.6 per cent of total exports.

Oil products imported from Trinidad and Tobago, valued at nearly $80 million, accounted for 90.9 per cent of total imports.

“Significantly, trade between The Bahamas and Caribbean Community (CARICOM) countries was minimal as the region represented only 2.6 per cent of total imports and less than one quarter of one per cent of total exports,” it continued. “Pharmaceutical products imported from Barbados were valued at $1.0 million accounted for 1.1 per cent of CARICOM imports.”

July 02, 2014

Jones Bahamas

Making the WTO democratic

By Sir Ronald Sanders:


The World Trade Organization (WTO) held its fifth public forum in Geneva over three days beginning September 15. It has become a kind of international bazaar in which every conceivable idea on trade and development is discussed formally and informally by representatives of virtually every government in the world and more Non-Governmental Organizations (NGOs) than can be easily counted.

A great deal of talk takes place without too much follow-up action.

But, maybe that’s the point. People who talk to each other aren’t warring, so long may the talk continue.

That’s not to say that good ideas don’t emerge from this overcrowded market place. They do. But many perish shortly after they are unveiled, usually because representatives of a powerful government or group of governments regard them as a threat to their interest, and quickly kill them off.

I was in Geneva for a Writers’ Conference on a book on negotiations in the WTO for which I am contributing a chapter. All the writers are from what used to be called the “third world,” a description seldom used these days, not because we have miraculously graduated into some better world, but because other descriptions suit the agenda of those who dictate the form of discourse on the global economy. Far better, in their view, to describe poor countries as “emerging” or “developing” whether or not they are really emerging or developing.

The purpose of the book, which has been commissioned by a progressive organization called CUTS International, is to tell the story of the many aspects of WTO negotiations from the point of view of negotiators from developing countries.

When it is published, it should make fascinating reading. It will break new ground in presenting the personal knowledge and experiences of the writers who were either in the trenches of the negotiations or were marginalized from the “inner sanctum” in which only the rich and powerful nations enjoy belonger’s rights, and into which they invite only those they wish to suborn in order to stich-up deals.

Of the many features of the WTO which point to the need for reform, this insider trading - in what has come to be called ‘the green room’ - is among the worst. No democratically managed organization should continue a process which so blatantly excludes from decision-making the weak, poor, small, and vulnerable nations which – as it happens – make up the majority of world’s countries.

That it has continued so long is entirely the fault of the majority of governments who allow it to happen without tangible and meaningful protest, such as packing their bags and going home leaving the ‘green room’ insiders to deal only with themselves, and returning only when there is a table at which representatives of all parties sit as equals.

But, that would call for two things – courage and solidarity, two very scarce commodities among “third world” governments these days. National interests have changed, some argue, and in pursuing these interests following a “third world” strategy is not productive.

It is worth, noting, however, that a “developed countries” strategy has never altered. The world’s industrialized nations continue to cling to their councils and to exploit their advantages. For instance, the creation of the G20 (the industrialized nations and the larger and wealthier developed countries) has not overshadowed - let alone eliminated - the G7 (the industrialized nations alone) who continue to devise and coordinate their own global positions.

Against this background, I was surprised to hear Pascal Lamy, the Director-General of the WTO, say at the opening of this year’s Public Forum, almost boastfully, that while the G20 has signalled the requirement for institutional reform of some international organizations, “the WTO was not amongst them”.

Lamy went on to say: “That governance battle has already been fought in the trade sphere, and the outcome is a fairly democratic institution where the voice of the small cannot be ignored.”

I have no doubt that Lamy believes what he says, but his belief – however sincere and fervent – does not make his statement right. The governance of the WTO is still an open sore. Despite Lamy’s personal efforts, the organisation still reflects the preponderance of power by the industrialised nations and the marginalization of poor, small, and vulnerable countries.

“No board, no quotas. One member, one vote, is the background rule against which the WTO forges its consensus”, Lamy declared. Oh, were that to be entirely true, what a far better world would mankind inhabit than the one we endure today.

Sure, there is technically no board and no quotas, but every representative of a small or poor nation knows that decision making is still the preserve of a few nations whose economic power allows them to arrogate to themselves the right to dictate agendas and outcomes. The WTO is very far from the consensus decision-making body that it should be. It is still not yet even the “fairly democratic institution” that Lamy believes it to be.

Those who defend the ‘green room’ process do so on the basis that it is impossible to negotiate agreements with over 150 countries at the same table. There is truth in that. But it is equally true that representatives of like-minded groups of these countries can gather on sectorial issues that are important to them such as agriculture or services. This way their voices will be heard during the debate and account taken over their views.

Against this background, it is good for developing countries - and small and vulnerable countries in particular - that the Bahamas is now negotiating the terms of its accession to full membership of the WTO. No country can now afford to stay out of an organisation whose rules govern world trade, and every country should want a say in the rules of the game it has to play.

The Bahamas will strengthen the voice of small and vulnerable countries, who if they act with courage and in solidarity with themselves and other like-minded developing nations, can negotiate meaningful recognition and fair and flexible treatment for their people – in other words, try to make the WTO truly democratic.

September 17, 2010

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