No one doubts that boosting exports is one of the key challenges for Latin American and Caribbean countries bent on achieving sustainable economic growth. According to Juan José Taccone, director of the IDB's Institute for the Integration of Latin America and the Caribbean (INTAL), the question is how these nations should improve their exporting performance in markets that are being radically changed by globalization.
This issue was tackled at a forum organized in June by the Buenos Aires-based INTAL, the IDB's Trade and Integration Division and the World Bank. Participating were experts in export promotion from Latin America and the Caribbean, the United States, Asia and Europe.
Summing up the meeting's conclusions, Taccone explained why governments and export promotion agencies must continue to lend a strong hand to the private sector, even in this age of retrenchment of the state and shrinking subsidies.
"The government has an important role to play in helping the private sector overcome what economists call, in their jargon, asymmetries and information gaps," he wrote.
In particular, export promotion policies should address certain blind spots in the markets that frequently thwart potential exporters. For example, small and medium-sized companies in the region lack sufficient information about business opportunities, consumer preferences and quality requirements in other countries. The cost of gathering such data is far too high for most entrepreneurs to undertake individually. Even if they could afford it, companies fear that their competitors will ride on their coat-tails without having to pay any research and marketing costs.
The same thing can be said about pioneering exporters, who must make a considerable investment in attempts to pry open a foreign market, cultivating contacts, establishing distribution chains and other costly activities which will later be used by their rivals.
Likewise, most companies in the region do not have the wherewithal to run ambitious technological research or training programs. As a consequence, they miss out on the productivity gains achieved by enterprises with deeper pockets.
These are gaps that can be successfully filled by national export promotion agencies, Taccone writes. He points to the fact that there are several examples in the Americas of agencies that cull information on foreign markets for their exporters and encourage their companies to attend trade fairs in order to help them become acquainted with markets abroad. Export promotion agencies could also help build bridges between enterprises and universities and research centers in order to help improve their technological and human resources.
Experts at the INTAL forum agreed that national export promotion agencies should be funded jointly by the public and private sectors, should have a fair degree of autonomy, and their executives should not be constrained by pay scales set for government workers.
The latest issue of the INTAL journal Integration & Trade includes an eight-article series on the new regional and multilateral trade scenario and the experiences of export promotion agencies in Brazil, Chile, Colombia, Costa Rica and Mexico.