IDB urges action on nearshoring possibilities

Governments and businesses in Latin America and the Caribbean are being urged to take advantage of nearshoring opportunities before it is too late.

This call has come from President of the Inter-American Development Bank Mauricio Claver-Carone, who indicated on Tuesday that the region had the potential to increase its exports by close to US$80 billion annually by seizing short-term opportunities in nearshoring.

“Today, let’s be honest, Latin America and the Caribbean is lagging other parts of the world in its global participation, but we estimate that the region would experience an annual increase of nearly US$80 billion annually in exports by seizing short-term nearshoring opportunities,” he said.

Nearshoring is the outsourcing of business processes to companies or setting up of business in countries near to target markets. Claver-Carone argued that the pandemic and the ongoing war in Ukraine were “triggering adjustments to commercial ties and adding inflationary pressures”, which was in turn driving the urgency for realignment in trade.

“We have before us a once in a generation opening for global trade insertion and nearshoring, and the moment to seize that is now. If we lose it we are not going to see it in any of our lifetimes. The stars have never been more aligned for Latin America and the Caribbean,” said Claver-Carone.

“Opportunities that fall by the way side amount to little more than wishful thinking, and what all of us need today is action not rhetoric . . . We need action,” he said. “That is key. The opportunity exists. It is there today, and doing so, particularly to the benefit of Latin America and the Caribbean, is not a geopolitical issue. It is about creating jobs, investments and opportunities in Latin America and the Caribbean first and foremost,” he said.

The IDB official was addressing the opening of an inaugural ministers and CEOs forum on trade and investment on the margins of the 9th summit of the Americas, which is taking place in Los Angeles, California. The historic meeting brought together ministers from some 20 countries and representatives
of more than 100 multinational companies to discuss issues relating to trade and investment in Latin America and the Caribbean.

During the trade and investment forum, officials were expected to consider the reforms and investments that countries in the Caribbean and Latin America can make to better attract private sector investments and “build out the supply chains that are waiting to take shape”, consider how trade is environmentally and socially sustainable and explore the issue of trade and digitalisation, said Claver-Carone.

He indicated that investment indicators were going down for China but going up for Latin America and the Caribbean, as he called on leaders to “depoliticise nearshoring, depoliticise commerce and depoliticise trade”.

“Depoliticise it, this is not a political issue. This is about growth and investment, a unique opportunity to propel new partnerships with the international private sector to achieve the growth and development that we need in these . . . times. For all of us, it is abundantly clear that to firmly establish medium and long-term growth, the region needs more public-private corporation and a clear focus on the issues we are discussing here today – the essential elements for a modern trade agenda and for fostering investment and expanding a sustainable international commerce,” he said.

He added the region had a “long-standing potential and vision to recognise the ripening possibilities” in trade and investment, but insisted that to grab hold of the opportunities “firstly, we need to reconfigure regional value chains and improve nearshoring partnerships within the Americas and across Europe”.

“Currently more than 50 per cent of the world’s trade happens within global value chains and participating in them bring both economic and social benefits,” he said, while indicating that other benefits include increased productivity, increase in GDP per capita, better paying jobs and employment opportunities for more women.

“We also need a modern trade agenda for Latin America and the Caribbean and for the hemisphere at large to help all of us connect the dots to what could be and what should be,” he added.

Pledging the IDB’s continued support, Claver-Carone said based on the outcomes of Tuesday’s discussions, the IDB would develop and create an action plan based on the input from representatives of the countries and businesses, for how the institution will offer more innovative solutions in the public and private sector for greater investment, trade and integration.(PR)