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A Review of Changes in the Global Value Chain of Latin America
- Author Sungwoo Hong
- Series23-17
- Date2023-05-25
Based on the findings of the value chain analysis conducted on major Latin American countries, it suggests that these countries may have derived certain economic benefits. This can be attributed to the increased exports to the United States and China, where Latin American countries served as substitute countries for imports during the intensifying competition between the two nations.
Amidst the U.S.-China hegemony race and the supply chain disruptions caused by the COVID-19 pandemic, there is a notable shift in focus. Particularly, the United States is actively working to establish secure and stable supply chains, primarily centered around its own country and allied nations, with the intention of reducing dependence on China. As part of this process, the United States advocates for reshoring or near-shoring, which involves relocating production facilities to its home country or neighboring nations. Additionally, the U.S. is implementing various incentives to support this objective.
If near-shoring takes place in Latin America, they can be regarded as favorable locations for establishing a foothold to access North America or securing key minerals. Additionally, Latin American countries with substantial backward linkages should be prioritized in trade with the United States. Among them, Mexico and Brazil, which exhibit relatively high levels of backward linkage within Latin America, are considered suitable hubs due to their capacity for generating significant foreign added value in their exports to the United States.
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