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Productive Innovation and Integration with Asia: Priorities for Latin American Pacific Basin Countries

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27 October 2010|Press Release

ECLAC Executive Secretary Alicia Bárcena presented two documents with policy recommendations in these areas.

(15 October 2010) Latin America's possibilities for growth and competition in the global market should focus on innovation and forging closer ties with Asian Pacific nations, which have become the world's main pole of economic growth, states the Economic Commission for Latin America and the Caribbean (ECLAC) in two reports.

The documents were presented today by ECLAC Executive Secretary Alicia Bárcena during the VI Ministerial Meeting of the Latin American Pacific Basin Forum held in Cuzco, Peru.

In the first report, Science and Technology in the Latin American Pacific Basin: Opportunity for Innovation and Competition, ECLAC suggests that innovation is a central element in development strategies because it gives way to sustainable, long-term economic growth with equality and competitiveness.

The analysis of the performance of countries in the Latin American Pacific Basin (Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama and Peru) in terms of research and development (R&D) shows that the region has not been too active in this field: average investment has been lower than 0.5% of GPD in recent years and in many countries it barely reaches 0.1%.

In contrast, some Asian-Pacific nations, such as Hong Kong (Special Administrative Region of China), China, Singapore or South Korea, have increased investment by over 50% in only seven years.

The number of researchers per one thousand members of the economically active population (EAP) reveals significant differences: Chile has 2.03 researchers per every one thousand members of the EAP, Mexico has 1.08, and Costa Rica and Colombia 0.3, while Japan and South Korea have 10.

"In light of this, reducing the productivity gap is essential for advancing towards structural changes and the diversification of exports (long-term competition strategy), strengthening sectors intensive in technology and knowledge," said Bárcena.

In the document The Latin American Pacific Basin: Creating Paths for Complementation and Integration with Asia, ECLAC asserts that closer ties with the Asia Pacific region may require more institution-building in the Pacific Basin as a way to boost its identity before Asian nations.

This approach should take into account the specific characteristics of each counterpart and seek to open a dialogue based on building trust, with an agenda that includes long-term economic and political dimensions as well as cooperation.

The study notes that the participation of the Latin American Pacific Basin in world trade represents slightly more than 3% of global exports of goods, less than half of that of ASEAN countries (6.5%), the Association of Southeast Asian Nations comprised by Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Vietnam, Laos, Myanmar and Cambodia.

ASEAN GDP is similar to that of the Pacific Basin (US$1,479,792 million and US$1,582,439 million, respectively). However, its exports, which totaled US$810,000 million in 2009, are more than double than those from the Pacific Basin (US$381,032 million).

The report concludes that greater economic ties between the Basin and Asia should consider a two-pronged approach that, on the one hand, seeks a more efficient use of the comparative advantages of natural resources, and on the other, intensifies efforts to foment its international competitiveness in the manufacturing sector by encouraging the insertion of companies in the Pacific Basin in Asian supply and value chains.

"We need to view relations with Asia Pacific not as a menace, but as a great opportunity and advantage," stated Bárcena. "The countries in the Basin should agree on a common and coordinated strategy in managing its relations with Asia Pacific, which has become the most dynamic pole of the world economy."



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